U.S. and Europe spar over next stage of dispute for aircraft subsidy

The transatlantic dispute over support for Europe’s Airbus and U.S. rival Boeing has already led to U.S. tariffs on European goods and could lead to a tit-for-tat EU response.

The United States said on Wednesday it had notified the World Trade Organization (WTO) that it had fully complied with WTO findings by repealing tax breaks for Boeing in Washington state.

Washington state’s legislature in March repealed the preferential aerospace tax break first introduced 16 years ago, which saved Boeing some $118 million in 2018 based on its published jetliner revenue.

The WTO has found the world’s two largest planemakers received billions of dollars of unfair subsidies in a pair of cases dating back to 2004.

Last year it allowed the United States to levy tariffs on $7.5 billion worth of EU goods, including aircraft, wines and cheese, due to Airbus subsidies that it had deemed illegal.

Now it is considering whether to grant similar rights to the EU in a parallel case involving illegal support for Boeing.

“With Washington State’s repeal of this relatively minor tax reduction, the United States has fully implemented the WTO’s recommendation, ending this dispute,” U.S. Trade Representative Robert Lighthizer said. “This step ensures that there is no valid basis for the EU to retaliate against any U.S. goods.”

Wednesday’s formal U.S. submission to the WTO aims to neutralize the EU’s demand for some $10 billion in annual tariffs, USTR said.

But the EU’s executive Commission rejected the move and said the United States remained out of step with the WTO’s rule-setting Dispute Settlement Body.

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