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EU targets nearly $12 billion of US goods in Boeing-subsidies dispute

By JONATHAN STEARNS AND VIKTORIA DENDRINOU | Bloomberg | Published: April 12, 2019

The European Union is considering hitting $11.5 billion of U.S. goods ranging from handbags to helicopters with retaliatory tariffs in a dispute over subsidies to Boeing, according to a draft list seen by Bloomberg News.

The plan follows a U.S. threat to target $11 billion of European goods ranging from helicopters to cheeses with import duties to counter state aid to Airbus. Both moves stem from parallel, 14-year-old, disputes at the World Trade Organization over market-distorting support for aircraft makers.

The European Commission, the EU's executive arm, outlined its retaliation plan to trade experts from the bloc's national governments on Friday in Brussels, an official said on the condition of anonymity because the deliberations were behind closed doors.

The WTO will ultimately determine the amounts of imports that both sides would be allowed to target in the two cases. On April 9, the commission dubbed the U.S. aim of hitting $11 billion of imports from the EU "greatly exaggerated."

The renewed transatlantic wrangling over aviation subsidies heightens EU-U.S. trade tensions prompted by President Donald Trump's "America First" protectionism, especially his controversial duties on foreign steel and aluminum based on national-security grounds and his threat to apply automotive levies on the same basis.

An escalation of transatlantic commercial tensions would in turn add risks to a global economy already suffering from Trump's bigger trade war with China. In a Twitter post on April 10, Trump called the EU "a brutal trading partner."

So far, the EU has applied tit-for-tat tariffs on 2.8 billion euros of American goods in response to Trump's metal duties and threatened to hit a further 20 billion euros of U.S. products with levies should Washington restrict automotive imports.

To counter the threat of U.S. duties on foreign cars and auto parts, commission President Jean-Claude Juncker reached a truce with Trump last July in which both sides pledged to work toward scaling back transatlantic market barriers including tariffs on industrial goods.

EU governments advanced that plan on April 11 when their ambassadors to the bloc gave the go-ahead for European trade chief Cecilia Malmstrom to negotiate cuts in industrial tariffs. The envoys also approved a mandate for her to seek deeper EU-U.S. regulatory cooperation.

The list of U.S. goods on the commission's draft retaliation list in the Boeing-aid case also includes video-game consoles, fitness equipment, casino game tables, tobacco, vodka, orange juice and a range of foods including chocolate, ketchup and frozen lobster.

The EU imports of the listed goods have a total value of around 20 billion euros and the bloc would eventually apply duties on a selection of the products whose combined worth would equal the retaliatory amount that the WTO ends up authorizing, according to the official.

The U.S. list published on April 8 includes EU goods such as motorcycles, cheese and wine.

The Geneva-based WTO is due to set in the coming months the amount of European goods that the U.S. would be able to target and, in late 2019 or in early 2020, on the value of American products that the EU could hit.
 

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