Europe May Have to Hit U.S. With Tariffs to Settle Aircraft Dispute

The European Union may have no option but to impose retaliatory tariffs against the U.S. over its illegal aid to Boeing Co. in order to settle the longstanding transatlantic dispute over aircraft subsidies, according to a senior EU official.

Sabine Weyand, the EU’s top civil servant for trade policy, signaled the U.S. government feels it has leverage over the bloc after hitting $7.5 billion of European goods with duties last October in retaliation over unlawful support for Airbus SE.

Washington won the green light for the penalties from the World Trade Organization, which in a tit-for-tat case is due to determine as soon as next month the damages the EU can seek over market-distorting state help for Boeing. While awaiting that verdict, the EU says it has proposed a settlement that Washington is shunning.

The U.S. “is very comfortable in the current situation because they got their award before we got ours,” Weyand said on Thursday in Brussels during an online panel debate about international trade. “I’m afraid that we will have to wait for our award—and for the imposition of sanctions by the EU on the U.S. side—in order to re-balance the level playing field in terms of the negotiation.”

The coronavirus-induced worldwide economic slump this year has raised the prospect of the EU and U.S. de-escalating their aircraft-aid battle, not least because aviation has been one of the hardest-hit industries.

Weyand offered little sign on Thursday that such a scenario will play out before the WTO decision on damages the EU can claim in the Boeing case. The bloc has drawn up a plan for countermeasures worth $12 billion.

“We will probably have a few more difficult months ahead of us before we manage to get everyone to the negotiating table,” she said. “It is more urgent in the context of the need for economic recovery.”