The U.S. has won the largest arbitration award in World Trade Organization history in its dispute with the European Union over illegal subsidies to Airbus. This follows four previous panel and appellate reports from 2011-18 findings that EU subsidies to Airbus have broken WTO rules. In retaliatory action, the U.S. Trade Representative plans to place higher tariffs on the EU, including on its cheese, yogurt and butter.
“We strongly support the World Trade Organization’s imposition of $7.5 billion in retaliatory duties on European products, including dairy foods, to prod the EU to uphold its World Trade Organization commitments and reinforce the importance of two-way trade,” the National Milk Producers Federation (NMPF) said in a statement.
USTR noted in a statement that the $7.5 billion annual award is by far the largest award in WTO history — nearly twice the largest previous award. The arbitrator calculated this amount based on WTO findings that EU launch aid for Airbus is causing significant lost sales of Boeing large civil aircraft as well as impeding exports of Boeing's large aircraft to the EU, Australia, China, Korea, Singapore and United Arab Emirates markets. Under WTO rules, the arbitrator’s decision is final and not subject to appeal.
“The United States will begin applying WTO-approved tariffs on certain EU goods beginning Oct. 18. We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers,” USTR ambassador Robert Lighthizer said.
The tariffs will be applied to a range of imports from EU member states, with the bulk of the tariffs being applied to imports from France, Germany, Spain and the U.K. – the four countries responsible for the illegal subsidies. Although USTR has the authority to apply a 100% tariff on affected products, at this time, the tariff increases will be limited to 10% on large civil aircraft and 25% on agricultural and other products. The U.S. has the authority to increase the tariffs at any time or change the products affected, USTR said.
NMPF said the U.S. is running a $1.6 billion dairy trade deficit with Europe because of unfair EU trade practices that block U.S. access to the EU market while the EU enjoys broad access to the U.S.
“The retaliatory tariffs announced today are a clarion call for fair trade and an indication that trade must be a two-way trade," NMPF stated. "What better way to reduce the U.S. trade deficit with Europe than by selling them award-winning U.S. cheeses?”
NMPF added that trade authorities should also address the EU’s abuse of geographical indication (GI) use to limit competition from cheese exporters in the U.S. that use common food names. “Rather than compete head to head with high-quality, American-made foods by allowing the use of common food names to coexist alongside GIs relating to those products, Europe instead blocks sales of these everyday food products from the United States and aggressively pressures other countries to do the same,” NMPF added in its statement.