September 28, 2021

Volume XI, Number 271

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September 27, 2021

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U.S. And The EU Suspend Airbus, Boeing Tariffs

Highlights

  • The U.S. and the EU have suspended retaliatory tariffs on $11.5 billion of various products for five years, including aircraft

  • This suspension follows a similar suspension of tariffs between the U.S. and the U.K., which was announced in March 2021

  • Additionally, the U.S. and EU have aligned to address “emerging threats” in this arena from China

On June 15, 2021, the United States and the European Union announced the suspension of retaliatory tariffs on $11.5 billion of various products they had initiated against one another, as a result of the longstanding dispute related to subsidies provided to Airbus and Boeing, respectively. 

Prior to the suspension, the World Trade Organization (WTO) authorized the U.S. to impose tariffs on $7.5 billion worth of products annually from the EU. The EU, on the other hand, was imposing tariffs on $4 billion worth of products from the U.S. after the WTO authorized it to impose tariffs of up to $3.9 billion. 

In March 2021, both sides had agreed to a four-month suspension of the tariffs. Following the U.S.-EU summit held in Brussels earlier this month, each side agreed to temporarily remove the retaliatory tariffs. The tariffs will be suspended for five years while the U.S. and EU try to settle a portion of the trade dispute pertaining to subsidies provided to Airbus and Boeing. Separately, the U.S. and United Kingdom suspended the retaliatory tariffs against each other at the beginning of 2021.

The longstanding dispute the United States has had with the EU over subsidies being given to Airbus started over 17 years ago. The U.S. alleged that Europe had been providing massive subsidies to Airbus which seriously injured the U.S. aerospace industry and its workers and were inconsistent with WTO obligations. The EU had also made similar claims about the U.S. providing massive subsidies to Boeing. Because the EU failed to comply with prior WTO rulings, the WTO ruling with regard to this dispute allowed the U.S. to apply retaliatory tariffs until the harmful EU subsidies were removed.

The U.S. tariffs were limited to 10 percent on large civil aircraft and 25 percent on more than 150 agricultural and other products imported from the EU. The tariffs applied to products primarily from France, Germany, Spain and the United Kingdom, which were the four countries responsible for the illegal subsidies. The products included Scotch whiskies, sweaters, coats, coffee, waffles, frozen meat, olives, fresh cheeses and wine. On the other hand, the WTO also authorized the EU to implement tariffs against U.S. goods, which they did and those products included whisky, jeans, and motorcycles.

The five-year suspension allows each side to provide financing in the aircraft sector as long as it is done on market terms and funding for R&D is done in a transparent manner. The agreement also establishes a working group to address aircraft subsidy trade disputes and encourage cooperation.

According to reports, the U.S. Trade Representative, Katherine Tai has said the U.S. has the option to reinstate the tariffs if the EU subsidies “cross a red line and U.S. producers are not able to compete fairly and on a level playing field.”

The agreement also addresses “emerging threats” from countries such as China, and the U.S. and the EU plan to draw up rules that will allow them to take action against countries who unfairly bolster their aircraft industry.

© 2021 BARNES & THORNBURG LLPNational Law Review, Volume XI, Number 207
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About this Author

David M. Spooner, Barnes Thornburg Law Firm, Washington DC, Corporate and Finance Law Attorney
Partner

David M. Spooner is a partner in the Corporate Department and Co-Chair of the International Trade Practice Group. Mr. Spooner represents governments, trade associations, and corporate clients on international trade matters, including trade remedies, trade policy and customs issues. He uses his past experience as a high-level political appointee in the Executive Branch and on Capitol Hill to assist clients with their advocacy efforts before both branches of government, as well as before foreign governments.

Prior to entering private practice, Mr...

202-371-6377
Linda M. Weinberg International trade lawyer Barnes Thornburg
Partner

Linda Weinberg provides practical advice to business and institutional clients on international trade law, including export controls, foreign assets control and customs. She works regularly with the U.S. and foreign government agencies that regulate international trade to help clients realize their distinct objectives surrounding their global commerce initiatives.

Co-chair of the firm’s International Trade practice group, Linda advises and represents clients on commodity jurisdiction, export classification, licensing, technical assistance agreements, and enforcement related to...

202-408-6902
Timo Rehbock International Corporate Lawyer Barnes Thornburg Law Firm
Partner

Chair of the firm’s European practice group, Timo Rehbock advises on domestic and international corporate and commercial matters. His experience ranges from general commercial contracts to private equity and venture capital investments, mergers, acquisitions, restructurings, financings, and strategic alliances.

Timo has a strong domestic and an established international corporate and commercial law practice. He has more than a decade of experience in representing clients on complex inbound and outbound matters. Fluent in English, German, French, and Spanish, Timo advises clients on...

312-214-4592
Adetayo Osuntogun Associate DC Corporate  Customs  Export Controls  International Trade  Trade Remedies
Associate

Tayo handles matters on his clients’ behalf regarding compliance with U.S. export control regulations, including the Export Administration Regulations (EAR), International Traffic in Arms Regulations (ITAR), U.S. sanctions programs and other trade regulations.

Adetayo "Tayo" Osuntogun’s practice focuses on international trade, export controls, economic sanctions, and internal investigations. Tayo works with major automotive OEMs and Tier 1 suppliers, including conducting export compliance investigations, performing internal audits, and designing trade and export compliance programs...

202-371-6365
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