US plans tariffs on US$7.5B of EU goods

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The United States plans to impose tariffs on a wide range of goods from the European Union after the World Trade Organization gave it permission to impose levies on $7.5 billion of EU exports to counteract subsidies to Airbus, the Office of the US Trade Representative said in a statement Wednesday.

In an arbitration decision announced earlier in the day, the WTO said that the amount is commensurate with the adverse effects suffered by Airbus' US rival Boeing in terms of lost sales and impeded deliveries of its aircraft.

Washington will begin applying WTO-approved tariffs on certain EU goods beginning Oct 18, US Trade Representative Robert Lighthizer said, while adding, "We expect to enter into negotiations with the European Union aimed at resolving this issue."

Although the USTR has the authority to apply a 100 percent tariff on affected products, at this time the tariff increases will be limited to 10 percent on large civil aircraft and 25 percent on agricultural and other products, the statement said.

Following the WTO arbitration decision, the EU released a statement from its trade commissioner, Cecilia Malmstrom, saying, "We remain of the view that even if the United States obtains authorization from the WTO Dispute Settlement Body, opting for applying countermeasures now would be shortsighted and counterproductive.

"Both the EU and the US have been found at fault by the WTO dispute settlement system for continuing to provide certain unlawful subsidies to their aircraft manufacturers.

"In the parallel Boeing case, the EU will in some months equally be granted rights to impose countermeasures against the US as a result of its continued failure to comply with WTO rules."

Airbus, meanwhile, said additional tariffs are "still avoidable." Airbus is hopeful that the US and the EU will agree to find a negotiated solution before "creating serious damage" to the aviation industry as well as to trade relations and the global economy, it said.

Airbus spokesman Clay McConnell said the France-based company was evaluating the list and its possible consequences.

"Airbus considers that the only way to prevent the negative effects that these countermeasures would create will be for the US and EU to find a resolution to this long-running dispute through a negotiated settlement before the tariffs become effective," he said.

US measures will not have exactly the same effect on different EU member countries, said Ding Chun, director of the Center for European Studies of Fudan University.

France, Germany, Spain and the United Kingdom subsidize Airbus' aircraft manufacturing, and those countries are also major targets of US countermeasures. For France, the US is aiming to levy more tariffs on Airbus and wines, while for Germany, the US is mainly targeting the automobile industry, Ding said.

Shen Haijun, a professor with the School of Aerospace Engineering and Applied Mechanics at Tongji University, told China Business Network: "The European Union suggested a negotiated settlement of disputes between the EU and the US, so that they may together face competition from the aviation industries of other countries.

"But the problem is, the aviation industrial players of other countries can't really stand as rivals to the US and Europe, given the current global aviation industry competition scenarios. The suggestion from the EU is more like something to mediate disputes and ease the situation, while the US is eager to crack down on the EU, and excuses can't really convince the US."

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