Both sides have now been found guilty of paying billions of dollars of subsidies to gain advantage in the global aircraft manufacturing business.
The EU is still waiting to hear from the WTO about what "retaliation rights" it has after the organization found in 2012 that Boeing too had received billions of dollars in illegal subsidies that had been to the detriment of Airbus. The WTO also ruled in March that the U.S. had failed to comply fully with its earlier ruling to remove all illegal subsidies that Boeing had received.
The European Commission spokesman also said Tuesday that Brussels is ready to retaliate in kind, noting that in the parallel Boeing dispute, "the determination of EU retaliation rights is also coming closer and the EU will request the WTO-appointed arbitrator to determine the EU's retaliation rights."
Some analysts have accused the U.S. of double standards. GAM's Investment Director for Global Equities, Ali Miremadi, said the U.S.' tariff proposal was "quite bold."
"I have to say the country which is the home to Boeing accusing Europe of state subsidies for Airbus — this is quite bold," he told CNBC's "Squawk Box Europe" Tuesday.
"It's very well established that both Boeing and Airbus exist only at the discretion of their respective hosts or host governments."
President Donald Trump tweeted Tuesday that "the EU has taken advantage of the U.S. on trade for many years."
UBS' Global Wealth Management's Chief Economist Paul Donovan noted wryly that Trump had accepted the WTO ruling much more readily than usual.
"The WTO has ruled that Airbus received unfair subsidies from the EU and U.S. President Trump has, rather unusually, decided to agree with the WTO," Donovan said in a regular podcast Tuesday.
"Whether U.S. President Trump would be quite so willing to accept the verdict of the WTO about unfair assistance from the U.S. to Boeing, which is an ongoing case, is a rather different matter."
ed_merckx on April 9th, 2019 at 15:49 UTC »
Well, what they actually said is the $11bb number thrown out by Trump is above the level of allowed retaliatory tariffs which is decided by the WTO. This is in regard to an over decades long trade lawsuit in which the US claimed Airbus was directly subsidized to the tune of billions by the EU. They claim that these direct subsidies were illegal under current trade agreements.
The case has been going on for a while here's a good overview. In the past the WTO has ruled that the B&O tax rate provided by Washington state was illegal and then also showed the US didn't actually end them however Boeing has said they will comply with the ruling. This is something like $325 million in benefits in the state of Washington.
I still don't think the final ruling on all of this is out yet, it's expected later in the year, but this is the first time the WTO has specifically claimed the EU subsidies to airbus were in fact illegal. The way it works though is the WTO appoints an arbiter to decide the damage caused by said subsidies at which point the aggrieved nation (in this case the united states) is allowed to impose a certain amount of economic tariffs or sanctions as a sort of reparation if you will.
The Eu's response was much more measured and not "slammed" or anything. From the article;
The US official also goes on to say they will have tariffs ready when the WTO releases their final report, which will specify the exact size of the illegal benefits Airbus received. EU claims the $11 billion number trump tossed around is much higher than what the WTO will find, but they don't deny their actions constituted an illegal subsidy.
This is all really a lot of noise. It's a big case that's been going on for more than 10 years, will probably have a mundane ending to it with the WTO laying out a specific number and there will be some negotation and the US will get to slap a few billion dollars worth of sanctions on some things that will have a pretty unnoticeable impact on the overall economy really. Considering the US and EU has a ~$39.2 trillion combined economy (US ~20.5trillion GDP and EU ~18.7) Trillion), were talking like a few basis points of impact to overall GDP even if the WTO approved the full $11 billion of tariffs, which is unlikely. Really a lot of noise.
weedut on April 9th, 2019 at 14:18 UTC »
Use the word ‘slams’ one more time and I’ll fuckin puke
_invalidusername on April 9th, 2019 at 13:14 UTC »
Fighting a trade war on multiple fronts. Seems like a great idea