Airbus offers subsidy concession to end US tariffs
PARIS (Reuters) – Airbus on Friday said it would increase loan repayments to France and Spain in a “final” attempt to reverse U.S. tariffs and push the United States to settle an old dispute 16 years on billions of dollars in aircraft subsidies.
The European Union, France and Spain said the decision to increase interest rates paid by Airbus on A350 aircraft development loans should settle the dispute at the World Trade Organization and urged Washington to remove tariffs on EU goods.
“In the absence of a regulation, the EU will be ready to take full advantage of its own sanction rights,” said EU Trade Commissioner Phil Hogan.
The loans are part of a system targeted by the United States in the world’s largest corporate trade dispute, which has also issued a condemnation of U.S. support for Boeing.
Last year, the United States obtained permission from the WTO to impose tariffs on up to $ 7.5 billion of EU products, from wine to whiskey.
Trade groups are bracing for an escalation in the dispute in the fall, when the EU is expected to get WTO approval to strike back with its own tariffs on Boeing subsidies.
The WTO has criticized Europe and the United States for giving illegal support to their respective jet makers. But over the past eight years, the argument has mostly revolved around whether each party obeyed these decisions amid multiple appeals.
“With this latest decision, Airbus considers itself in full compliance with all WTO rulings,” said Airbus.
In May, the United States declared itself in full compliance with the WTO findings after Washington state scrapped aerospace industry tax breaks that have largely benefited Boeing.
Although Airbus is not officially a party to the case – which pits the United States against the EU as well as Britain, France, Germany and Spain – Friday’s statement opens the is in negotiations to settle the dispute, a European source said.
The two sides have repeatedly called for negotiations while accusing the other of failing to respond seriously to the invitation.
Boeing made no immediate comment. The United States trade representative did not immediately respond to the request for comment.
“It’s an interesting development but there is a lack of detail and no reference to correcting illegal subsidies for the A380,” a US source said.
Airbus says funding for the A380 is no longer relevant after deciding to scrap the world’s largest airliner due to weak sales.
The latest move comes amid growing pressure on Airbus and European governments from industries hit by US tariffs.
They are angry at being penalized for illegal support to aircraft manufacturers just as their own industries are reeling from the coronavirus outbreak. The Scotch Whiskey Association has called for a settlement before the tariffs cause “irreparable damage.”
The fallout is not limited to Europe.
Airbus said US airlines have been affected by the tariffs on European jets. The US Distilled Spirits Council said beverage companies on both sides of the Atlantic “have suffered enough.”
European officials are trying to overturn U.S. tariffs on legal grounds, but say they were upset by a procedural dispute after Washington blocked nominations to the WTO’s appeals body. US President Donald Trump has criticized the WTO.
At the same time, the timetable for the EU’s retaliatory sanctions has slipped by several months, until September or October.
“We are in a stalemate and must get out of it. It’s a way to show good faith and open the door to find a solution, ”said a European industry source, referring to the rescheduled loans.
Reporting by Tim Hepher, Leigh Thomas, Gabriela Baczynska, Kate Abnett, David Shepardson, Into Landauro, Caroline Copley, editing by Catherine Evans and Susan Fenton