On Tuesday (Oct. 13), the European Union won the right to impose tariffs on $4 billion of U.S. goods in retaliation for subsidies received by aircraft manufacturer Boeing BA. Washington, for its part, has already imposed border tariffs on EU imports.
Image courtesy of: FX168 Financial News Service
With just three weeks left until the U.S. presidential election on Nov. 3, a World Trade Organization (WTO) tariff ruling could heighten trade tensions on both sides of the Atlantic. However, negotiators on both sides have said it could eventually lead to discussions between the two sides to resolve the 16-year-old legal dispute.
Both the United States and the European Union have expressed interest in resolving their respective disputes over subsidies provided to Boeing and Airbus aircraft manufacturers. But both accuse the other of refusing to talk seriously.
Tuesday"s decision was delayed by the outbreak. It follows a WTO ruling last year that allowed the U.S. to impose $7.5 billion in tariffs on EU government support for Airbus. Airbus has operations in the United Kingdom, France, Germany and Spain. Together, the two cases represent the world's largest-ever corporate trade dispute.
Since then, the U.S. has moved to repeal the tax incentives that benefited Boeing, while Airbus has announced that it will increase loan repayments for French and Spanish A350s in order to address the issue.
The European Commission (European Commission) said it prefers a negotiated solution, but would impose tariffs without negotiations. The EU has drawn up a list of U.S. products that could be targeted, including aircraft, wine, spirits, suitcases, tractors, frozen fish, and everything from dried onions to cherries.
It could act as early as after the Oct. 26 WTO meeting, but few analysts expect it to do so before the election because of the U.S. election.
Valdis Dombrovskis, executive vice president of the European Commission, said in a statement: "I have made it clear that I strongly prefer to negotiate a solution with the United States and to avoid harmful measures and countermeasures. He said:Our proposal is that the U.S. cancel the tariffs imposed as a result of the Airbus ruling. This way the EU will not exercise our right to retaliate.