WASHINGTON: A long-running US-EU aircraft trade dispute flew to new heights as the year drew to a close, as Washington hit France and Germany with new punitive import tariffs.

It was the latest retaliation in the 16-year-old conflict over government subsidies for competing aircraft manufacturers Airbus and Boeing, and defies recent statements that the sides were close to reaching a final truce.

The US Trade Representative (USTR)late Wednesday announced new tariffs on aircraft parts, wine, cognac and brandies from France and Germany, adding those to a long list of products from EU countries that have been subject to 25 percent duties since 2019.

The USTR said the move was in retaliation for tariffs the European Union imposed in November which it considers unjustified and calculated unfairly.

The latest twist in the battle over aircraft subsidies that turned increasingly sour under the protectionist instincts of US President Donald Trump comes despite hopes for a trade truce once President-elect Joe Biden takes office January 20.

The World Trade Organization (WTO) has given the go ahead for Brussels and Washington to impose the retaliatory duties in separate but related cases over subsidies granted to Boeing and Airbus.

After a WTO ruling in October, the EU last month levied additional customs duties on $4 billion worth of American products including Boeing planes but also farm produce, such as wheat and tobacco, plus strong alcohol and chocolate.

But Washington said the EU calculated the amount using pandemic-ravaged trade data, which meant a much wider array of American goods were targeted.

“In implementing its tariffs... the EU used trade data from a period in which trade volumes had been drastically reduced due to the horrific effects on the global economy from the Covid-19 virus,” the USTR said.

“The result of this choice was that Europe imposed tariffs on substantially more products than would have been covered if it had utilised a normal period.” As a result the US “is forced to change its reference period to the same period used by the European Union,” the statement said.

At the time the tariffs were announced, USTR complained the move was unjustified since the subsidies provided to Boeing by the state of Washington had long since been revoked, but did not raise the calculation issue in the public statement.

But the statement Wednesday said “the United States explained to the EU the distortive effect of its selected time period, the EU refused to change its approach.” However, USTR said that “in order to not escalate the situation, the United States is adjusting the product coverage by less than the full amount that would be justified utilizing the EU’s chosen time period.” The US also deplored an EU decision to exclude the UK from its calculations, which it argued unfairly increased the tariffs.

As usual in the trans-Atlantic dispute, each side blames the other for the escalation.

Hope for a truce Brussels complained on Thursday that Washington had “unilaterally” disrupted ongoing talks and said it would seek a solution to the row with the incoming administration, which takes office on January 20.

The European Commission said it “regrets that the United States has chosen to add further EU products to its retaliation list in the WTO Airbus case on aircraft subsidies.”

“The EU will engage with the new US Administration at the earliest possible moment to continue these negotiations and find a lasting solution to the dispute,” it said.

The feud over European aircraft manufacturer Airbus and its American competitor Boeing is the longest and most complicated ever handled by the WTO.

The aviation feud predates Trump, but Washington quickly embraced the opportunity to impose tariffs on in European goods after the WTO last year authorized duties on a record $7.5 billion in goods.

Washington imposed punitive tariffs of 25 percent on iconic EU products such as wine, cheese and olive oil and put a 15 percent tariff on Airbus planes in March.

Published in Dawn, January 1st, 2021