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US proposes $11bn in tariffs on European products over Airbus subsidies

US proposes $11bn in tariffs on European products over Airbus subsidies
The US Trade Representative (USTR) said on Monday it was weighing tariffs on billions of dollars’ worth of goods from the European Union in retaliation to the subsidies allegedly provided to Boeing’s rival, Airbus.

The products would range from large commercial aircraft and parts to dairy and wine, the USTR said. A preliminary list of goods has been issued for public consultation.

The USTR explained it was kicking off the process in response to damage from subsidies provided to Airbus by the EU that the World Trade Organization (WTO) has found cause “adverse effects” to the US.

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EU responded on Tuesday, saying it is preparing to retaliate against the US over Boeing subsidies. The level of the proposed US countermeasures was “greatly exaggerated,” an unnamed European Commission source told Reuters. It added the amount of retaliation could only be determined by a WTO arbitrator.

“In the parallel Boeing dispute, the determination of EU retaliation rights is also coming closer and the EU will request the WTO-appointed arbitrator to determine the EU’s retaliation rights,” the source said. The Commission was preparing to take action after the arbitrator’s decision, added the source.

Airbus also said it saw no legal basis for Washington’s move and warned of deepening transatlantic trade tensions.

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It has been nearly 15 years since the US first complained to the WTO that European aircraft maker Airbus widely benefits from billions of dollars in illegal subsidies. The EU and US have been fighting for more than a decade over mutual claims of illegal aid to Boeing and Airbus.

They have filed cases at the WTO and paid billions of dollars in subsidies to gain an advantage in the global aircraft manufacturing business.

“Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft,” US Trade Representative Robert Lighthizer said, adding: “When the EU ends these harmful subsidies, the additional US duties imposed in response can be lifted.”

Boeing said in a statement that it “supports the US trade representative and his team in their ongoing efforts to level the playing field in the global aircraft marketplace.”

Last year, the WTO said it would evaluate the US’ request to introduce sanctions on European products in response to a ruling that the EU doles out illegal subsidies to Airbus.

The US estimated the value of the subsidies as worth $11.2 billion in trade, though the EU has challenged that estimate.

The USTR said it would announce a final product list after a WTO arbiter evaluates the claims. The result is expected in a few months.

The proposed US tariffs would be imposed in addition to existing levies on European products. Last year, Washington increased the import tax on steel and aluminum from key allies, including the EU.

Retaliatory levies on €2.8 billion worth of US goods have been placed by the EU on products such as bourbon whiskey, motorcycles, and orange juice.

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