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UPDATE 2-WTO backs EU tariffs on $4 bln U.S. goods over Boeing subsidies -sources

Wed, 30th Sep 2020 01:02

(Adds quote from former U.S. official)

By Tim Hepher and Andrea Shalal

Sept 30 (Reuters) - The World Trade Organization has
authorized the European Union to impose tariffs on U.S. goods
worth $4 billion to retaliate against subsidies for American
planemaker Boeing Co, people familiar with the matter
said.

The delayed award provides a fresh source of potential trade
friction weeks before November's U.S. presidential election,
after Washington last year began imposing tariffs on $7.5
billion worth of EU goods over state support for Boeing rival
Airbus.

The two sides have been locked in a 16-year-old dispute at
the Geneva-based WTO over aid to their aircraft industries in a
pair of cases that together represent the world's largest-ever
corporate trade dispute.

They were informed of the decision by WTO arbitrators on
Friday, and the award is expected to be published within weeks.

The U.S. Trade Representative and the EU's Washington office
did not immediately answer requests for comment.

Boeing declined to comment on the confidential WTO report
but accused Airbus of ignoring its recent decision to forgo tax
breaks in Washington state to try to resolve the dispute.

Airbus, which recently announced its own concessions on
funding in France and Spain, was not immediately available.

Sources on both sides said EU tariffs on products such as
Boeing jets, which must still be adopted formally by the WTO,
were unlikely to be imposed before the Nov. 3 presidential
election as Brussels seeks to avoid inflaming a bitter campaign.

Both sides are expected to claim victory, however, with U.S.
sources pointing to the higher core tariffs in favor of Boeing.

European sources said the latest award does not include some
$4.2 billion of tariffs against the United States left over from
an earlier case, giving the EU $8.2 billion in total firepower.

The United States says the previous award, granting the EU
tariffs to retaliate against special tax treatment for U.S.
exporters, which the EU never implemented, is no longer valid
because a law creating the disputed system was repealed in 2006.

The WTO has refused to be drawn into the controversy over
unused tariffs, saying it has nothing to add to previous rulings
on the former system of U.S. Foreign Sales Corporations.

Analysts say the eagerly awaited ruling on EU
counter-tariffs could finally ease years of deadlock, during
which both sides signaled interest in settling the aircraft
dispute while accusing the other of refusing to talk seriously.

"Everybody’s been waiting for this. It sets the stage for a
negotiation," said William Reinsch, a former senior U.S.
Commerce Department official and trade expert at the Council on
Strategic and International Studies.
(Reporting by Tim Hepher in Paris and Andrea Shalal in
Washington; Additional reporting by Eric M. Johnson and David
Lawder; editing by Grant McCool, Lisa Shumaker and Jonathan
Oatis)

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