EU Measures Regarding the WTO Boeing-Airbus Disputes

POSITION | FOREIGN TRADE POLICY

EU Measures Regarding the WTO Boeing-Airbus Disputes Position on Possible EU Measures in Response to U.S. Tariffs Subsequent to the Boeing-Airbus Disputes.

19. December 2019

Background 23. Oktober 2017 Since October 18th, 2019, the United States levies retaliatory duties on numerous goods from individual EU countries, including Germany. 1 Legal basis for this is a dispute settlement ruling from the World Trade Organization (WTO) on European subsidies for the aircraft manufacturer Airbus. 2 On December 2nd, a WTO compliance panel report was published, which concluded that EU member states have not yet become WTO-compliant. In reaction, the Trump administration announced to review extending or raising the duties. The EU has appealed this panel report. 3 In a separate WTO dispute settlement case on U.S. subsidies for Boeing, a panel has also established that the United States had granted subsidies to Boeing that are not in compliance with WTO rules.

However, the case is delayed by about eight months. The WTO has yet to determine the amount of damages, which is expected for June 2020.4

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The official list of products subject to the retaliatory tariffs can be found under the following link: United States Trade Representative, Notice of Determination and Action Pursuant to Section 301: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute, Federal Register /Vol. 84, No. 196 /Wednesday, October 9, 2019 /Notices, <https://ustr.gov/sites/default/files/enforcement/301Investigations/Notice_of_Determination_and_Action_Pursuant_to_Section_ 301-Large_Civil_Aircraft_Dispute.pdf>, (accessed on 04.12.2019).

2 The proceedings in the Airbus case, including the final decision, can be found under the following link: World Trade Organisation, DS316: European Communities and Certain member States – Measures Affecting Trade in Large Civil Aircraft, <https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds316_e.htm >, (accessed on 04.12.2019).

3 United States Trade Representative, Review of Action: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute, <https://www.strtrade.com/media/publication/7946_Review_of_Action_Enforcement_of_U.S._WTO_Rights_in_Large_Civil_Air craft_Dispute.pdf>, (accessed on 12.12.2019).

4 The proceedings in the Boeing case, including the final decision, can be found at the following link: World Trade Organisation, DS317: United States – Measures Affecting Trade in Large Civil Aircraft, < https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds317_e.htm>, (accessed on 04.12.2019).

Dr. Annika-Stormy Mildner | Außenwirtschaft | T: +49 30 2028-1568 | S.Mildner@bdi.eu | www.bdi.eu

EU Measures Regarding the WTO Boeing-Airbus Disputes

Key Points of the BDI Position High costs on both sides of the Atlantic Although the U.S. tariffs are in compliance with WTO rules, they are a burden to the transatlantic relationship. Economically, they are extremely damaging and lead to unnecessary costs for consumers and producers on both sides of the Atlantic.

Negotiate solution as soon as possible German industry supports the European Commission in its efforts to reach a solution via negotiations as soon as possible. This should be in line with the spirit of the WTO. Aviation subsidies must be WTOcompliant on both sides of the Atlantic. As a result of such an understanding, all retaliatory tariffs in the aviation sector should be removed.

Improvement of the WTO regulatory framework In addition, the EU and the United States should agree to work together, under the auspices of the WTO, to promote a plurilateral agreement on future restrictions on state subsidies. The United States should also abandon its blockade of the Appellate Body of the WTOâ&#x20AC;&#x2122;s dispute settlement mechanism.

WTO members should agree on a reform to strengthen the dispute settlement mechanism as soon as possible.

Mechanism to prevent future transatlantic aviation conflicts In order to prevent future conflicts over support in the aviation sector, transatlantic partners should agree on a transatlantic mechanism that promotes the exchange of information and cooperation, for example through regular dialogue formats.

Take retaliatory measures If the United States continues to be unwilling to negotiate subsequent to the WTO ruling on the damage caused to the EU in the Boeing case, the EU should take retaliatory measures. This should be done in close consultation with European industry. The measures should be appropriate, take the protection of legitimate expectations and legal certainty into account, be WTO-compliant and compatible with the union interest.

Signal willingness to negotiate Even in this case, the EU Commission should not stop being open for discussing the matter and signal that it remains open to a transatlantic agreement on state subsidies in the aviation sector.

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EU Measures Regarding the WTO Boeing-Airbus Disputes

Imprint BDI â&#x20AC;&#x201C; Federation of German Industries Breite StraĂ&#x;e 29, 10178 Berlin www.bdi.eu T: +49 30 2028-0 Compilation Dr. Annika-Stormy Mildner T: +49 30 2028-1568 S.Mildner@bdi.eu Valerie Ross T: +49 30 2028-1623 V.Ross@bdi.eu Lennart Jansen T: +49 30 2028-1483 L.Jansen@bdi.eu

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