U.S. May Increase Tariffs after WTO Rejects EU Claims over Airbus

The World Trade Organization on Monday rejected European Union claims that it no longer provides subsidies to planemaker Airbus, prompting the United States to say it could increase retaliatory tariffs on a wider range of European goods.

A new compliance report from the Geneva trade watchdog found that the Airbus A380 and A350 jetliners continue to be subsidised as a result of past European government loans.

U.S. Trade Representative Robert Lighthizer said the decision affirmed that European subsidies to Airbus continued to harm the U.S. aerospace industry, and strong action was required to eliminate such market-distorting subsidies.

It was the latest salvo in a record transatlantic trade dispute involving mutual claims of illegal aircraft subsidies, which comes to a head at a time of rising global trade tensions and has grabbed the attention of financial markets this year.

The United States was in October awarded the right to impose tariffs on $7.5 billion of annual EU imports in its case against Airbus. It placed partial tariffs on most Airbus jets and products from cheese to olives and single-malt whisky.

In Monday’s finding, a three-person panel rejected EU claims that a recent decision by Airbus to stop producing the slow-selling A380 meant the giant airliner could no longer be seen as a threat to Boeing, whose competing 747 is also out of fashion.

While the WTO no longer faulted Airbus for causing lost sales to Boeing with the A380, which is no longer marketed, it ruled that the superjumbo would cause market-share damage to Boeing for as long as it is produced and delivered.

Airbus plans to shut production in mid-2021.

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