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Boeing-Airbus Dispute Continues; EU to Enforce More Tariffs

By Alicia Arizpe | Wed, 10/14/2020 - 11:37

One of the largest corporate disputes in history took another turn yesterday after the World Trade Organization (WTO) upheld a decision to allow the EU to impose tariffs on US imports’ worth US$4 billion. The decision is just the latest turn in what started as complaints regarding unfair subsides among the largest aerospace companies in the world, Airbus and Boeing. The battle now involves billions in imports and exports between the US and Europe.

The ages-long rivalry between Airbus and Boeing led to a now 16-year-old trade war that shows little signs of stopping. Back in 2004, the US accused the French aerospace giant Airbus of receiving unfair subsidies from the EU, after which the EU was quick to point out the subsides that the US’ Boeing had received from the US government. The accusations led the WTO to launch separate investigations in 2005. While the WTO ruled that some of EU’s loans to Airbus were unfair, another panel backed the EU’s claim against Boeing since the latter had received subsides from the US government and NASA.

Throughout the following decade and a half, both companies would claim to be operating under WTO rules while accusing their competition of failing to do so. WTO has ruled that both companies have been unfairly subsidized by their respective governments and allowed those governments to impose tariffs in numerous foreign products. In 2019, the US was allowed multimillion-dollar tariffs on olive oil, cheese, wine and many other products coming from the EU and a 10 percent tariff on Airbus jets. WTO’s latest decision allows the EU to impose import tariffs on US$4 billion of US goods including wine, spirits and produce.

Both Airbus and Boeing have been pressured by their respective governments to resolve the trade dispute and both companies have repeatedly said that they are following WTO rules to the letter. In July 2020, urged by the French government, Airbus agreed to higher interest rates on the loans it received from the governments of France and Spain to develop the A350. However, the trade dispute continues. The European Commission has stated that it would refrain from imposing tariffs if the US would walk back from the ones it imposed on European goods.

Alicia Arizpe Alicia Arizpe Senior Writer