European Union member states will start slapping a 15% tariff on Boeing aircraft from today, Tuesday, November 10. This follows a World Trade Organization ruling in late October that authorized the EU member states to take countermeasures against what it called “illegal US subsidies to aircraft maker Boeing.”
On October 26, the WTO gave the EU the tick of approval to launch countermeasures against the US. Those countermeasures, in the form of tariffs, are coming into effect today.
The origins of this dispute can be traced back to 2005 when the EU took issue with the US over prohibited and actionable subsidies provided to US producers of large civil aircraft. In the EU’s sights were a Washington State tax program that allegedly unlawfully subsidized Boeing, NASA and US Department of Defence procurement contracts that benefited Boeing at Airbus’s expense, and an allegedly illegal US tax concession that supported exports.
The EU argued that these benefits breached the rules of the Agreement on Subsidies and Countervailing Measures and GATT 1994.
In 2019, the World Trade Organization’s Appellate Body (a panel that hears disputes between WTO members) agreed with the EU. It ruled that US had not taken appropriate action to comply with WTO rules on subsidies. Further, and despite previous rulings, the US continued to illegally support Boeing to the detriment of Airbus.
The EU tariffs will impact a range of US exports, including civilian aircraft manufactured by Boeing. All up, the tariffs are worth about US$4 billion.
A Boeing spokesperson told Simple Flying the decision was disappointing.
“Instead of escalating this any further, we hope that Airbus and the EU will take meaningful action to resolve this trade dispute.”
Excluded from the tariff are Airbus planes and parts manufactured in the US. This includes the A220s produced in Mobile, Alabama.