The European Union could impose retaliatory measures against $3.99 billion worth of U.S. goods as soon as next month after an Oct. 13 ruling by a World Trade Organization arbitrator in a long-running transatlantic dispute over aircraft subsidies. These measures are most likely to be tariff increases, which could be as high as 100 percent. The EU has not yet issued a list of products that may be affected, but an April 2019 preliminary list included aircraft, auto parts, tractors, handbags, video game consoles, chemicals, and food products.

However, U.S. Trade Representative Robert Lighthizer claimed that the EU “has no valid basis to retaliate against any U.S. products.” He explained that the WTO arbitrator only authorized countermeasures relating to a tax break offered by Washington state “but explicitly did not take into consideration Washington State’s repeal of that tax provision on April 1 of this year.” A USTR press release noted that under WTO rules a member can apply countermeasures “only until the illegal measure, or the harm from that measure, is eliminated.” Because that “has already occurred in this case,” Lighthizer said any EU imposition of tariffs “will force a U.S. response.”

The U.S. continues to impose additional tariffs of 25 percent on various non-aircraft products and 15 percent on large civil aircraft from the EU and its member states following a WTO authorization in this dispute to retaliate against $7.5 billion worth of EU goods. The U.S. has rejected the EU’s claims that it has complied with a WTO ruling against its subsidies to Airbus, stating that Brussels has not taken any action on six of the launch aid measures found to be inconsistent with WTO rules.

Nevertheless, USTR held out hope that the 16-year-old dispute could yet be resolved. Lighthizer said the U.S. is “waiting for a response from the EU to a recent U.S. proposal and will intensify our ongoing negotiations with the EU to restore fair competition and a level playing field to this sector.” The USTR press release added that in an effort to maximize the chances of success in these negotiations the U.S. has “exercised restraint by declining to impose on the EU the full amount of authorized countermeasures.”

For more information, please contact Nicole Bivens Collinson or Kristen Smith.

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