Chennai: Tension between the European Union and the United States government might end up starting a second trade war close on the heels of tensions between the US and China, according to reports.
The news comes after aircraft manufacturer Airbus’s announcement about stopping sales of world’s largest airliner the A380 has reignited the transatlantic trade row over mutual claims of illegal aircraft subsidies, state reports.
Airbus is implementing a two-year plan to stop making the worldâs largest airliner due to weak sales. This move comes at a time of a record trade dispute between the European Union and the United States over government support for Airbus and its US rival Boeing.
Reports stated that after 15 years and thousands of pages of arguments, the two sides are locked in arbitration proceedings at the World Trade Organization (WTO) to determine the amount of harm each has caused through support, a possible precursor to sanctions.
The WTOâs appeals body, last year, said the EU had failed to remove subsidised government development loans for the worldâs largest airliner, the A380, and Europeâs newest long-haul jet, the A350, causing losses for Boeing and the US workers.
Now, the EU is preparing to argue to the WTO that A380 subsidies no longer exist because the aircraft is being taken off the market, said reports, adding that the EU will argue that the A380 part of the case should be halted because it will not be built after 2021, citing an earlier decision to drop charges on the now defunct A340.
Standing firm, the US argues that subsidies paid to the A380 in the form of government loans have irreparably caused lost sales to Boeing and that this should be remedied through sanctions.
Last yearâs appeals ruling was part of a two-way battle between the EU and the US over aircraft subsidies that could spark tit-for-tat reprisals between the two trade superpowers.
The Trump administration last year said the United States would slap countermeasures on European goods unless the EU stopped ‘harming US interests’. WTO rules allow it to target any industry since all goods fall into one category.
Boeing has predicted such tariffs could reach billions of dollars a year starting as early as 2019. The EU has highlighted wins in a parallel case against US subsidies for Boeing, and Airbus says this could in turn spark EU sanctions against the US.
| What goes around… |
| US president Donald Trump is looking to pass a new bill in Congress that would give him the ability to raise tariffs. The idea behind the “Reciprocal Trade Act” is to fight back against alleged high tariffs imposed on US imports.
Enhanced US tariffs would hit the German car industry hard, with UBS suggesting that BMW, Mercedes and Volkswagen would lose around 90 per cent of their luxury car sales in the US. Today, the US Commerce Department is expected to report on whether car imports do pose a threat to national security. Talks with Washington will begin this month and reports state that as Brexit looms, the EU will be under pressure to cut a deal. |