Boeing: Hit Airbus Harder to Resolve Dispute

Date: February 13, 2020
Source: Politico

As USTR nears an expected decision on Friday to rotate — and probably also increase — retaliatory duties on $7.5 billion worth of European goods in a dispute over EU subsidies for Airbus, Boeing is urging the U.S. trade agency to “narrowly” target its tariff bazooka at its European rival.

The duties should limit any negative impact on U.S. airlines and manufacturers while pressuring “key players needed for a resolution — Airbus, most notably — to actively engage the EU to promptly resolve this matter,” Boeing Senior Vice President and General Counsel Brett Gerry and Assistant General Counsel Jeb Boatman said in comments filed with USTR.

“One approach that would meet these principles would be to impose narrowly targeted tariffs on new civil airplane fuselage, wing, and tail assembly imports from France, Germany, Spain, and the United Kingdom,” they said.

Boeing officials made a similar argument earlier this year, but USTR ignored it. Instead, USTR imposed a 10 percent duty on new European aircraft and a 25 percent duty on a long list of other European goods, including cheese, single-malt Scotch, Irish whiskey, liqueurs, wine, sweaters, coffee, pipe cutters, various tools, sweet biscuits, olives and pork.

Jump on the ‘carousel’: Under U.S. law, a process known as “carousel” retaliation requires USTR to revise and review any WTO-authorized tariff 120 days after it’s imposed and then every 180 days afterward. The initial retaliation took effect on Oct. 18, making Friday the apparent deadline for the first rotation, although USTR has not acknowledged that.

USTR in December asked for comments on raising the retaliatory duties to 100 percent and revising the overall list by taking some items off and putting new items on.

In its comments, Boeing said its recommendations would close a “loophole … that has allowed Airbus to escape tariffs on Airbus airplanes delivered out of Mobile, Ala.,” where the European aerospace giant has a production facility. Boeing also stressed that its goal was to force the EU and Airbus to “end illegal subsidies,” not for the U.S. to have “ongoing tariffs.”

Zoellick weighs in: Former USTR Robert Zoellick, who filed the initial U.S. complaint against European support for Airbus more than 15 years ago, last week admitted some confusion over the Trump administration’s goals for the dispute. Boeing’s intent all those years ago was to seek a negotiated solution with the EU, “once we have some leverage,” Zoellick said.

But it’s unclear whether the Trump administration wants a deal or to use the retaliatory tariffs as “a club” to hit the EU, he said at a Washington International Trade Association event.

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