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U.S. and EU Propose Steep Tariffs in Connection with Long-Running Parallel Disputes over Disputed Subsidies to Airbus and Boeing

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On April 8, 2019, the United States Trade Representative (USTR) proposed imposing tariffs on $11.2 billion worth of products from the European Union (EU). USTR took this action in connection with an over decade long battle between the EU and the U.S. before the World Trade Organization (WTO) over mutual claims of illegal government subsidies to Airbus and its American rival, Boeing. In May 2018, the WTO Appellate Body upheld a panel finding that the EU failed to eliminate certain subsidies previously found to be WTO inconsistent, authorizing the U.S. to seek retaliatory tariffs on EU goods. USTR has estimated that the EU subsidies to Airbus have resulted in harm of $11 billion in trade annually to the U.S. This figure is subject to review by a WTO arbitrator who will determine the level of countermeasures to be authorized in the case. This report is expected to be issued this summer.

USTR issued for public comment a preliminary list of products that would be subject to the duties. The $11.2 billion worth of products identified in the preliminary list cover an extensive range of goods, including civil aircraft and helicopters from France, Germany, Spain or the United Kingdom, certain textile and apparel products, glassware, ceramic, and certain metal alloys from all EU member states, and various agricultural products (including lemons, cheese, olive oil, and wine) from all EU member states. The complete list can be found here.

USTR is seeking public comments and will hold a public hearing in connection with the proposed tariff list. USTR has requested “comments with respect to any aspect of the proposed action” including:

  • The specific products to be subject to increased duties, including whether products listed in the Annex should be retained or removed, or whether products not currently on the list should be added.
  • The level of the increase, if any, in the rate of duty.
  • The appropriate aggregate level of trade to be covered by additional duties.
  • Whether increased duties on particular products might have an adverse effect upon U.S. stakeholders, including small businesses and consumers.

The schedule for the proceeding is as follows.

  • May 6, 2019: Due date for submission of requests to appear at the public hearing and summary of testimony.
  • May 15, 2019: Date of public hearing regarding the proposed tariff list.
  • May 28, 2019: Due date for submission of written comments, including post-hearing rebuttal comments.

On April 17, 2019, just over a week after USTR issued its proposed list of tariffs on EU goods, the EU issued its own proposed list of tariffs on U.S. goods in response to the parallel WTO case concerning Boeing. In the Boeing case, the WTO authorized the EU to seek retaliatory tariffs on U.S. goods after concluding that the U.S. had failed to eliminate certain subsidies found to be WTO inconsistent. The EU’s proposed list targets $20 billion worth of U.S. goods and includes a variety of agricultural products, aircraft, tractors, and handbags. The complete list can be found here. The proposed list is open for public comment until May 31, days after the comment period closes for the U.S. proposed list of European goods.