WTO Approves $4B in Tariffs on U.S. Goods Imported to Europe

The widely-expected move could pave the way to a de-escalation of trade tensions between the E.U. and U.S.
Oct. 15, 2020
Daniel Dawson

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The European Union may impose up to $4 bil­lion worth of tar­iffs on goods imported from the United States, the World Trade Organization (WTO) said in its most recent rul­ing.

According to the WTO, the U.S. was found guilty of ille­gally sub­si­diz­ing the American air­craft man­u­fac­turer, Boeing.

It is my hope that the U.S. will now drop the tar­iffs imposed on E.U. exports last year. If it does not hap­pen, we will be forced to exer­cise our rights and impose sim­i­lar tar­iffs.- Valdis Dombrovskis, European Trade Commissioner

The long-awaited deci­sion comes almost exactly one year after the WTO made a sim­i­lar rul­ing and allowed the United States to impose $7.5 bil­lion worth of tar­iffs on European imports.

At that time, the inter­na­tional trade body found the E.U. guilty of ille­gally sub­si­diz­ing its own air­craft man­u­fac­turer, Airbus. The E.U. since said it has ended the sub­si­dies.

See Also: Trade News

Among the numer­ous goods tar­geted by the U.S. tar­iffs include pack­aged olive oil from Spain as well as some table olives from France and Spain, all three of which face a 25-per­cent import duty.

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For its part, the E.U. has already iden­ti­fied a num­ber of indus­trial and agri­cul­tural goods as poten­tial tar­iff tar­gets.

The dual deci­sions by the WTO bring a 16-year dis­pute between the U.S. and E.U. over ille­gal sub­si­dies pro­vided to their respec­tive air­craft man­u­fac­tur­ers to an end.

Trade experts widely expected Tuesday’s announce­ment from the WTO and have said that this result was needed in order for the two to begin nego­ti­a­tions.

For Spanish olive oil pro­duc­ers as well as French and Spanish table olive pro­duc­ers, the WTO deci­sion could mean the begin­ning of a process that my even­tu­ally elim­i­nate the tar­iffs. However, the speed and cer­tainty with which this process may move is not known.

This long-awaited deci­sion allows the European Union to impose tar­iffs on American prod­ucts enter­ing Europe,” European Trade Commissioner Valdis Dombrovskis said. I would much pre­fer not to do so – addi­tional duties are not in the eco­nomic inter­est of either side, par­tic­u­larly as we strive to recover from the COVID-19 reces­sion.”

It is my hope that the U.S. will now drop the tar­iffs imposed on E.U. exports last year,” he added. This would gen­er­ate pos­i­tive momen­tum both eco­nom­i­cally and polit­i­cally, and help us to find com­mon ground in other key areas… If it does not hap­pen, we will be forced to exer­cise our rights and impose sim­i­lar tar­iffs.”

However, the European Commission’s con­cil­ia­tory tone was not rec­i­p­ro­cated by the U.S. Trade Representative Robert Lighthizer.

While we dis­agree with cer­tain aspects of its val­u­a­tion, the more impor­tant point is that the arbi­tra­tor did not autho­rize any retal­i­a­tion for sub­si­dies other than the Washington state tax break,” Lighthizer said.

Because Washington state repealed that tax break ear­lier this year, the E.U. has no valid basis to retal­i­ate against any U.S. prod­ucts,” he added. Any impo­si­tion of tar­iffs based on a mea­sure that has been elim­i­nated is plainly con­trary to WTO prin­ci­ples and will force a U.S. response.”

The United States is deter­mined to find a res­o­lu­tion to this dis­pute,” Lighthizer con­cluded. We are wait­ing for a response from the E.U. to a recent U.S. pro­posal and will inten­sify our ongo­ing nego­ti­a­tions with the E.U. to restore fair com­pe­ti­tion and a level play­ing field to this sec­tor.”





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