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Subsidy scrap: US pulls tariff hikes threatened over EU Airbus aid

written by Sandy Milne | August 13, 2020

The US has backed off on a 15% spike in tariffs against EU products (Source: Australian Aviation archives).

The US has said that it will hold off on a planned $7.5 billion hike in tariffs charged on European goods, first levelled in response to subsidies provided by Brussels to French plane maker Airbus.

The eleventh-hour decision comes after the US in March repealed preferential aerospace tax breaks in response to a WTO ruling that held billions of dollars dished out to the world’s two largest plane makers were paid out in contravention of international competition law.

“The EU and member states have not taken the actions necessary to come into compliance with WTO decisions,” America’s top trade official, Robert Lighthizer, said on Wednesday.

“The United States, however, is committed to obtaining a long-term resolution to this dispute.”

On its part, the EU welcomed the decision, saying US lawmakers were wise “not to exacerbate the ongoing aircraft dispute by increasing tariffs on European products”.

According to the company’s own revenue reports, the subsidies saved Boeing some $118 million in 2018 alone, and the decision to cut them at first inflamed tensions between Boeing and US authorities.

However, the spat turned trans-Atlantic soon after Brussels refused to reciprocate, leading the US federal government to levy  border taxes against over 100 European-produced items, including single-malt whiskies and cheese.

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On Wednesday, Airbus spokesman Clay McConnell said that the company “profoundly regrets that, despite Europe’s recent actions to achieve full compliance, USTR [US Trade Representative] has decided to maintain tariffs on Airbus aircraft – especially at a time when aviation and other sectors are going through an unprecedented crisis”.

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