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U.S. planes, tractors on EU tariff list over Boeing

Stock MarketsApr 17, 2019 11:22AM ET
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© Reuters. FILE PHOTO: EU Commissioner Malmstrom speaks during an interview with Reuters in Brussels

By Philip Blenkinsop

BRUSSELS (Reuters) - Planes, tractors, food and handbags featured on a list of U.S. imports worth $20 billion that the European Union said on Wednesday it could hit with tariffs in a transatlantic aircraft subsidy dispute.

The 28-nation bloc said this week it was ready to open negotiations with the United States to cut industrial duties, but has now detailed plans that could lead to a new tit-for-tat trade conflict between the two global powers.

Transatlantic tensions were enflamed again on Wednesday when Washington said it would end a ban against U.S. citizens filing lawsuits against foreign companies operating in Cuba, with EU firms seen among the targets.

The two sides have been battling for almost 15 years at the World Trade Organization over subsidies given to U.S. planemaker Boeing (NYSE:BA) and its European rival Airbus.

Washington last week issued a seven-page list of EU products to target for tariffs, from large aircraft to dairy products and wine, to counteract $11 billion of harm it says EU subsidies for Airbus have caused.

Brussels has responded with its own list of some $20 billion worth of U.S. imports, also including planes and wine.

The 11-page list also features a diverse range of agricultural produce from dried fruit to ketchup, as well as frozen fish, tobacco, handbags, suitcases, tractors, helicopters and video game consoles.

It is now open to a public consultation until May 31 and could then be revised.

Both sides have said they would prefer a settlement that did not lead to the imposition of tariffs.

"We must continue to defend a level-playing field for our industry. But let me be clear, we do not want a tit-for-tat," EU Trade Commissioner Cecilia Malmstrom said in a statement

WTO arbitrators have yet to set amounts of damages or countermeasures in each case, but the U.S. case against Airbus is more advanced, with a ruling expected in June or July. Damages for the EU's Boeing complaint could come early in 2020.

UNEASY DETENTE

Washington and Brussels are already in conflict after U.S. President Donald Trump subjected EU steel and aluminum imports to punitive tariffs. The EU responded with duties on 2.8 billion euros ($3.2 billion) of U.S. imports.

Brussels then chose politically sensitive products, such as whisky from Kentucky and Harley Davidsons from Wisconsin.

An EU official said the new list was drawn up with the aim of having minimal impact on EU businesses, but also to serve as a deterrent and to cause discomfort to the other side.

It includes some 7 billion euros worth of aircraft; steam coal is in, but coking coal, used by steelmakers, is not; U.S. soybeans, which the EU has pledged to promote, have also been left out.

The two sides had appeared to reach a detente last July when Trump agreed not to impose tariffs on EU-produced cars and parts as long as the two sides negotiated on trade, including the removal of tariffs on "non-auto industrial goods."

The European Union declared itself ready on Monday to start formal talks to do just that.

The Commission is proposing two sets of negotiations - one to cut tariffs on industrial goods, the other to make it easier for companies to show that products meet EU or U.S. standards.

However, it has insisted that agriculture not be included, putting it at odds with Washington, which wants farm products to be part of the talks.

U.S. planes, tractors on EU tariff list over Boeing
 

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