Brussels has challenged the UK’s claim that it still has the right to hit US goods with tariffs should a dispute over aircraft subsidies persist, saying Britain will lose the power when the UK leaves the EU on January 1.
Britain will have no right to share in the EU retaliatory action authorised this year by the World Trade Organization against the US because of illegal subsidies for Chicago-based aerospace company Boeing, said the European Commission.
“The sole claimant in the Boeing case is the EU and it is the EU that is authorised to impose the counter measures as approved by the dispute settlement body,” added a commission spokesperson.
Brussels was reacting to an announcement on Tuesday by UK trade secretary Liz Truss that Britain was setting “an independent approach” to the long-running EU-US trade dispute over illegal subsidies to Boeing and Toulouse-based aerospace company Airbus.
Ms Truss said the UK would no longer be imposing any tariffs in the US case relating to Boeing from January 1 — but would reserve the right to do so in the future.
The EU last month slapped duties on $4bn worth of US imports including aircraft, in retaliation for injury caused by illegal subsidies to Boeing. The move came after the US imposed duties on $7.5bn of imports from the EU, including Airbus aircraft and Scotch whisky.
The UK’s move to break ranks with the EU angered the aerospace industry, which provides more than 100,000 jobs in the UK.
Airbus, one of the biggest UK employers in the civil aerospace sector, would no longer be able to trust the British government, said one industry executive.
“There was no consultation with industry on this,” added the executive. “This will not benefit Airbus. There will be only one beneficiary — Boeing, who will be delivering aircraft to IAG [owner of British Airways].”
Emily Thornberry, trade spokesperson for the opposition Labour party, said Ms Truss was “unilaterally withdrawing” from a dispute caused in part by unlawful US subsidies that were continuing to harm Airbus.
“It is not remotely clear what we as a country are getting in return,” she added.
One British government official admitted there had been no promise of reciprocity on tariffs from Robert Lighthizer, US trade representative, in response to the UK move.
But the official said the UK could have proceeded with tariffs on the US without any authorisation from the EU.
“There is no precedent for this,” he added. “It’s a complex issue but we are really clear that the UK is able to impose a share of the Boeing retaliatory rights that are allowed under the WTO.”
A spokesperson for the UK department for international trade said: “We are clear that the UK is entitled to impose a share of Boeing retaliatory rights in a way that is compliant with our rights and obligations under the WTO.
“UK industry has been harmed by the US subsidies . . . and we will not hesitate to reimpose tariffs if necessary to protect UK businesses and jobs.”
One trade expert said Brexit was unprecedented and the legal rules surrounding Britain’s WTO rights in this situation were unclear, given that the EU case against Boeing was brought by the bloc and not by member states.
The EU’s position was backed by a leading trade lawyer based in Geneva, location of the WTO headquarters. “The complainant [in the Boeing case] was unquestionably the EU so in principle the EU retains the right to retaliation, not the UK,” said the lawyer, who declined to be identified.
Meanwhile, signs exist that the EU and US are keen to reach a settlement in the Airbus-Boeing dispute. EU officials said the two sides were engaged in intensive negotiations to bring it to an end as quickly as possible.
The European Commission spokesperson said the EU was “ready to withdraw” all of its punitive tariffs related to the case “provided the same steps are taken by the US”.
Source: Economy - ft.com
