Tuesday, 20 October, 2020

European Union sectors hit by aircraft disputes call for de-escalation

Trump’s warning to the EU about subsidies U.S. offers to settle long-running aircraft-subsidy dispute if Airbus repays billions in European aid: sources
Deanna Wagner | 18 October, 2020, 15:44

The EU will seek final approval later this month to slap tariffs on $4 billion worth of USA imports in retaliation for subsidies granted to Boeing, after a World Trade Organization ruling handed down on Tuesday. Last year, the USA received approval to impose tariffs totaling up to US$7.5 billion annually on goods from Europe.

Under the new U.S. offer, interest rates on past loans to support Airbus development programmes would be reset to a level that assumed that only as few as half of the projects would succeed, two of the sources said, speaking on condition of anonymity. The arbitrator determined that payments to Boeing by the National Aeronautics and Space Administration (NASA) and the Department of Defense were not subsidies but that certain state of Washington tax exemptions and exclusions were subsidies in violation of the WTO's Agreement on Subsidies and Countervailing Measures.

Trade tensions between the European Union and the United States have worsened over the past few years, to some extent Airbus and Boeing are the two largest aircraft manufacturers in the world, Another accused of unfairly receiving billions of dollars in government subsidies.

The World Trade Organization decision is part of a 16-year-old dispute over granting subsidies Boeing.

But he warned in the absence of "constructive" USA participation even after the elections, the European Union will press ahead with tariffs.

The decision by the World Trade Organization on Tuesday was part of a almost 16-year-long trade dispute.

Details of the bid emerged after the U.S. said on Tuesday that it was waiting for an European Union response to an unspecified offer in the dispute.

Trump’s warning to the EU about subsidies
Pay up EU! Trump offers trade war truce if European Airbus repays billions in state aid

US Trade Representative Robert Lighthizer said on Tuesday the US would "intensify" talks to find a resolution to the longstanding dispute.

One European source called the US proposal "insulting" and said it could accelerate the tariff war.

But the move could cost Airbus up to £7.77bn - a figure branded as unacceptable to the while aircraft manufacturers seek extra funding to survive the coronavirus crisis.

A U.S. source said Washington was "serious" about getting Airbus to repay aid.

The WTO determined that the amount was "commensurate with the degree and nature of the adverse effects determined to exist" from USA support for Boeing considered to be in violation of worldwide trade rules, according to the 121-page arbitrator's report.

Washington argues that merely addressing future types of support would fail to resolve ongoing harm to Boeing caused by the presence on the Airbus balance sheet of past loans that it can still use to develop jets and offer unfairly low prices.

Airbus says the disputed system favours taxpayers because loan repayments on successful jets such as the A320 far outweigh amounts written off on jets that fail to reach sales targets.

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