In the continuing, long-running trade dispute between the United States and the European Union (EU) over aircraft subsidies, the World Trade Organization (WTO) on December 2, 2019, again ruled that the EU, despite earlier decisions instructing the EU to remove or alter its aircraft subsidies, has continued to provide support for the Airbus A350 and A380 jets which, in turn, has distorted the large civil aircraft market and placed U.S. aircraft manufacturers at an unfair disadvantage.
In October 2019, the WTO valued the harm of this subsidy program at $7.5 billion and allowed the United States to impose tariffs on EU products (see Trump and Trade Update of October 4, 2019). According to the Office of the U.S. Trade Representative (USTR), this most recent WTO ruling marks the sixth time that the WTO has found EU subsidies to Airbus violating WTO rules. In a press statement, USTR Robert Lighthizer said, “the EU tried yet again to show that minor changes to its Airbus subsidization package were enough to eliminate the WTO inconsistencies identified in the past. The WTO panel again rejected all of these claims and instead found that European governments had extended the subsidies by renegotiating the launch aid in a way even more favorable to Airbus.”
Given this most recent ruling by the WTO Dispute Settlement Body, the USTR announced that it will publish a Federal Register notice in the near future initiating a process to assess increasing the tariffs of 10 percent on large civil aircraft and 25 percent on agricultural and other products originating from EU countries that were implemented on October 18, 2019. This notice is likely to include additional EU products that could be subject to the tariffs.