(Reuters) – The U.S. government on Friday raised tariffs on aircraft imported from the European Union, ratcheting up pressure on the EU to resolve an epic 16-year-old dispute over support for airplane makers, and raising the stakes in broader talks to reach a U.S.-EU trade deal.
FILE PHOTO – Invited guests for the world premiere of the Boeing 787 Dreamliner are reflected in the fuselage of the aircraft at the 787 assembly plant in Everett, Washington, in this July 8, 2007 file photo. REUTERS/Robert Sorbo/Files
The World Trade Organization has found the world’s two largest planemakers received billions of dollars of unfair subsidies in a pair of cases dating back to 2004 and is expected to allow both sides to impose tariffs, starting with the United States.
Here are highlights of the feud that has spawned thousands of pages of rulings, triggered threats of tit-for-tat tariffs on goods from plane parts to whisky and left both sides claiming victory while racking up an estimated $100 million in costs.
The U.S. seeks talks with the EU and Airbus (AIR.PA) host nations Britain, France, Germany and Spain over alleged unfair subsidies via government loans. Washington terminates a 1992 U.S.-EU agreement covering support for Airbus and Boeing (BA.N). The EU files a complaint on U.S. aid for Boeing.
The WTO launches twin probes into public support for Boeing and Airbus after bilateral negotiations fail.
Airbus announces a new A350 jetliner for which it will seek further government loans from host nations.
The WTO issues an interim ruling that some European aid provided to Airbus violated a ban on export subsidies – a type of aid deemed most harmful and therefore automatically banned.
The WTO demands a halt to unfair aid for jets including the Airbus A380 superjumbo. It says some government loans for the jet amount to “prohibited” export subsidies. But it rejects a U.S. request to include aid for the newer A350 in the case.
The EU loses an appeal and is given until December to comply. However the WTO drops its finding that the A380 loans are in the “prohibited” category, softening its earlier ruling.
A separate WTO panel partially backs the EU in its counter-case alleging $19 billion of support for Boeing from the U.S. government, NASA and various states and municipalities, and rules against aid for Boeing worth at least $5.3 billion.
WTO appeal judges broadly uphold the ruling against U.S. support for Boeing.
Both sides say they have complied with the WTO’s rulings, while accusing the other side of failing to do so.
Boeing announces the twin-engined 777X and agrees to build it in Washington state shortly after the local legislature agrees $8.7 billion in new tax breaks.
The EU opens a second front in the trade battle by launching a separate complaint against the 777X tax breaks granted by Washington state and this time chooses a faster, all-or-nothing approach by targeting them purely as “prohibited” subsidies – without the usual fallback of a second, softer claim.
After a year-long lull in the main dispute, the WTO says the EU failed to comply with its earlier rulings on Airbus. It also agrees for the first time to target aid for the new A350 but rejects U.S. calls to put this in the “prohibited” category.
In November, the WTO rules tax breaks surrounding the development of the Boeing 777X – the subject of the EU’s second case – did fall into the more severe “prohibited” category.
WTO appeal judges reverse the ruling that the 777X tax breaks are in the “prohibited” column, bringing an abrupt halt to the EU’s second case.
In the EU’s main case, the WTO largely clears the United States of maintaining unfair support for Boeing but says it has failed to withdraw the earlier Washington state tax breaks.
The EU appeals this decision, but the WTO does not change its stance in a follow-on ruling, published the same year.
In May, the WTO again rules that the EU has failed to halt all subsidies to Airbus and that these continue to harm Boeing. The United States threatens sanctions on billions of dollars of European products. Both sides enter arbitration to determine the scope of tariffs. [nL5N1SM7QY]
In March, the WTO says the United States has again failed to halt subsidized tax breaks to Boeing in Washington state. [nL8N21F6KD] The two sides disagree widely in public over the amount of subsidy faulted by the WTO.
Both sides accuse the other of refusing to negotiate any settlement and unveil lists of billions of dollars of proposed tariffs on each others’ goods. [nL2N2421KN][nL5N2674AL]
WTO arbitrators award the United States the right to impose tariffs on $7.5 billion of annual EU imports in its case. In October, Washington imposes 10% tariffs on most European-made Airbus jets and 25% duties on products ranging from cheese to olives and single-malt whisky.
In December, the WTO rejects EU claims that it no longer provides subsidies to Airbus, prompting Washington to say it could increase tariffs on a wider range of European goods to increase pressure on Brussels to comply.
The United States announced it would raise tariffs on aircraft imported from the EU to 15% from 10%.
Though the U.S. Trade Representative’s Office said it was open to reaching a settlement with the EU on the issue, Washington said it could revise its actions if Brussels imposed additional tariffs on U.S. imports in connection with the aircraft subsidy disputes.
Reporting by Andrea Shalal and Tim Hepher; Editing by David Evans, Keith Weir and Daniel Wallis