The trade conflict between Europe and the United States has intensified, and the WTO ruled that the EU could impose retaliatory tariffs on 4 billion US goods
The World Trade Organization issued an arbitration ruling on the 13th, allowing the European Union to impose tariffs and other penalties on US goods and services totaling approximately US$3.99 billion on the grounds that the US illegally subsidized aircraft manufacturer Boeing.
At this time, there are only three weeks before the US presidential election on November 3, and the ruling may exacerbate tensions in US-European trade relations on both sides of the Atlantic.
The trade negotiators of both sides said that this may lead to the final settlement of the 16-year trade dispute through dialogue.
In October last year, the WTO authorized the United States to impose tariffs on Airbus aircraft and other imported European products worth 7.5 billion U.S. dollars, and Tuesday’s ruling will clear the way for the EU’s response.
EU officials have stated that they hope to negotiate a settlement with the United States, and many observers expect Europe to avoid imposing tariffs soon. The EU said last year that it had drafted a preliminary list of US products as a target for retaliation if necessary.
This is the longest trade dispute since the establishment of the WTO. In 2004, the United States sued European countries to the World Trade Organization regarding the subsidies received by Airbus. Soon after, Europe filed a lawsuit against the United States for subsidies to Boeing.
The WTO's subsequent ruling found that both sides had provided subsidies in violation of regulations, but the extent of subsidies provided by Europe was even more serious. Tuesday’s announcement ended years of litigation and counter-litigation, and left the choice of negotiation or trade war to both parties.
In October 2019, the United States imposed tariffs worth US$7.5 billion on EU products including Scotch whiskey, French wine and cheese in retaliation for EU subsidies to Airbus. The Scotch Whisky Association said this month that it imposed a 25% tariff on its exports, causing the industry’s exports to the United States to fall by 32% throughout the year, and a loss of up to 360 million pounds.
In response, the European Union said it would consider imposing tariffs on goods exported from the United States, including motorcycle parts, game consoles, fish and wine, and aircraft.
As Boeing struggles to deal with the unprecedented damage caused by the epidemic, imposing additional tariffs may increase Boeing’s financial pressure. In addition, after the Boeing 737 Max model experienced two fatal crashes and was grounded for 19 months, Boeing also tried to regain the regulatory authority's go-around authorization for this type of passenger aircraft.
So far, the EU has not yet decided when to retaliate. According to the "Financial Times" report, the EU still needs to formally apply to the WTO for authorization to impose tariffs. Reuters reported that few analysts believe that the EU will make this decision before the US election. In this regard, some analysts expect that the WTO ruling may lead to an escalation of trade tensions between Europe and the United States. At the same time, it is also possible that, as the Associated Press has said, arbitration may also prompt the two parties to initiate "intensive negotiations" in order to resolve the 16-year Disputes provide an opportunity.
In response to this result, the European Commission’s Executive Vice-President for Trade Affairs Valdis Donbrowskis stated on social media that the EU will immediately contact the United States to determine the next step with a “positive and constructive” attitude. "We strongly hope that the problem can be resolved through negotiation, otherwise we will be forced to protect our own interests and respond in an appropriate way."