U.S. may increase tariffs after WTO rejects EU claims over Airbus

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In a statement, Boeing said the decision confirmed that "billions of euros of illegal government subsidies to Airbus continue to harm the US aerospace industry".

The US trade representative slammed the ongoing subsidies as "massive EU corporate welfare" following the WTO's decision on Monday and insisted that American and European companies must compete on a "level playing field".

A World Trade Organization panel ruled Monday that the European Union has not complied with an order to end illegal subsidies for plane-maker Airbus, which prompted the Trump administration to impose tariffs on almost US$7.5 billion worth of EU goods in October.

Airbus said the WTO's decision to drop previous references to the A380 causing lost sales to Boeing meant the United States should slash its authorised tariffs by $2 billion to $5.5 billion.

An initial compliance panel had found that the European Union was breaking the rules but a year ago Brussels asked for a second panel to weigh in, arguing that it had modified its behaviour.

"The European Union and certain member states have failed to implement the recommendations and rulings of the Dispute Settlement Body to bring its measures into conformity with its obligations", the panel's decision said.

It therefore found that earlier rulings in the case, which paved the way for the historic USA penalty, "remain operative".

A European Commission spokesperson said: "We consider that the panel has made a number of serious legal errors in its assessment of EU compliance".

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Based on these findings, Airbus would support to appeal this report, as per WTO rules.

"The report also contains statements about workable ways to comply with WTO rules for subsidies that would be very problematic for a larger part of WTO membership", the statement added.

"Today's ruling is a complete loss for Airbus and its government sponsors", Boeing said in a statement.

The European plan maker added that the WTO ruling should lead to the United States "immediately reducing" the rates they had allowed by the WTO in October by "about $ 2 billion".

The European plane maker also called on the United States to "immediately" cut its retaliatory tariffs "by around two billion US dollars" because the panel found development loans for the A380 commercial jet no longer affect Boeing sales.

The EU is seeking to retaliate against USA tariffs that have affected European agriculture in early 2020, upon authorisation by the WTO. The EU retaliated with a counter case, alleging that Boeing had received $23 billion in "trade-distorting" subsidies in the U.S. mainly for its research and development projects.

The EU statement stated: "We remain fully committed to working with the United States on a fair and balanced solution for our respective aircraft industries".

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