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EU slaps tariffs on US ketchup, rum and tractors in aircraft dispute

European Union

The European Union will on Tuesday impose tit-for-tat tariffs on US products worth 4 billion dollars (3.37 billion euros) in the long-running battle surrounding aircraft manufacturers Airbus and Boeing, the European Commission announced on Monday.

A recent World Trade Organization ruling permitted the EU to impose tariffs, European Commission Vice President Valdis Dombrovskis said. “And that’s what we are doing,” he said.

The punitive tariffs will apply to products such as ketchup, rum, vodka and game consoles, according to the EU’s Official Journal.

The penalty tax will be 15 per cent on aircraft, and 25 per cent on all other products. Vehicles such as tractors and shovel loader are also affected, the entry in the journal published Monday night shows.
US Trade Representative Robert Lighthizer said he was disappointed by the move from Brussels, but did not announce any action.

“The alleged subsidy to Boeing was repealed seven months ago. The EU has long proclaimed its commitment to following WTO rules, but today’s announcement shows they do so only when convenient to them,” Lighthizer said.

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The commission’s announcements is the latest move in a 15-year-long dispute between Brussels and Washington over state support for the world’s two largest aircraft companies, the European Airbus consortium and its US rival Boeing.

The WTO’s ruling, issued in mid-October, allows the EU to impose tariffs on US imports worth nearly 4 billion dollars annually to retaliate against unfair aircraft subsidies.

In a similar case, the WTO authorized the US in 2019 to impose tariffs on EU products worth up to 7.5 billion dollars (6.3 billion euros) in response to illegal subsidies to European plane-maker Airbus.

“We have made clear at every stage that we want to settle this long-running issue,” Dombrovskis told media following a meeting between the EU trade ministers.

“Regrettably, in spite of our best efforts due to the lack of progress from the US side, we can confirm that the European Union will later today exercise our rights and impose the countermeasures awarded to us by the WTO in respect of Boeing,” he said.

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Aside from tariffs on the aircraft sector, the EU would also impose tariffs on agricultural and industrial products, he said.

The EU would remain open to negotiations, however, with the commission advocating for both sides to drop tariffs on each others products, Dombrovskis said.

German Economics Minister Peter Altmaier, however, pinned hopes on the new incoming US administration under president-elect Joe Biden to find a way out of the dispute.

During discussions with the trade ministers it had become clear, he said, that the great majority of countries saw the election “as an opportunity to recalibrate the trade relations, to solve trade disputes with the US.”

This could contribute to push the trade relations into a more anti-protectionist direction, Altmaier said.

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