PARIS - The European Union is poised to impose tariffs on up to $4 billion worth of U.S. goods and services in a dispute over alleged subsidies to U.S. airplane manufacturer Boeing. But there are signs of a compromise in the coming weeks.
EU officials on Monday announced they would move forward with plans to impose tariffs on a list of U.S. products that could include dried fruit, tobacco, rum, motorcycle parts and tractors.
The announcement came after the World Trade Organization ruled that Boeing had an unfair advantage over European airplane maker Airbus by receiving tax breaks from the U.S. state of Washington, where Boeing once had its headquarters.
U.S. Trade Representative Robert Lighthizer said the United States is disappointed by the EU action, which followed the World Trade Organization’s approval last year of U.S. tariffs on up to $7.5 billion dollars in European goods to punish the EU for subsidizing Boeing rival Airbus.
The transatlantic hostilities have continued since 2004, when Washington declared that a 1992 U.S.-EU agreement governing subsidies in the aircraft industry was dead.
Xavier Tytelman is an aeronautical consultant.
He said the issue is very complicated and it is not only a matter of direct subsidies or tax break to one constructor or another. Each camp, he said, could also see as illegal, for example, the size of a runaway extension, or the construction of a roundabout. Europeans and Americans concluded very detailed investigations to determine if the 1992 agreement was respected.
But some see hope for a compromise between Washington and Brussels. France’s economy minister, Bruno Le Maire, spoke on CNN recently.
In that interview, Le Maire said he thinks a compromise can be reached in the coming weeks and he sees the possibility of building an agreement between the United States and Europe. The minister also told CNN he does not underestimate the difficulties in bridging the gap between the two positions but says France will not spare any efforts to reach a compromise in the Boeing Airbus case in the interest of both the U.S. and Europe.
On both sides of the Atlantic, many observers are calling for an end to this bitter, 16-year trade battle in the aircraft industry. As both Airbus and Boeing build their airplanes now globally, many contractors are also hit by the sanctions, said Xavier Tytelman.
He explains that when Boeing or Airbus are taxed, all the contractors and entities working on aircrafts are sanctioned. He mentions that one finds American Honeywell products in an Airbus or components from the French company Safran in Boeing items.
Overall, Tytelman said he regrets that everyone is penalized by what he describes as a ridiculous trade war. He also explains that producers that have nothing to do with the aircraft industry, such as wine or cheese, are also sanctioned because of the trade war.
Some observers have suggested that Europe might delay the implementation of the new tariffs as leverage to negotiate with a new U.S. administration in January.