US and the EU must work together on a transparent, fair and enforceable system on state aid in the aerospace industry. This is in the interest of workers at both sides of the Atlantic.
The WTO ruling gives the US green light for tariffs of $7,5bn per year on a wide range of EU exports, including a levy of 10% on EU-made airplanes. It is the largest amount ever authorized by the WTO. The ruling is the latest twist in a 15-year transatlantic battle that centres on EU subsidies handed to Airbus and indirect aids given to Boeing through US defence budgets. In turn, the WTO will early next year decide about the case tabled by the EU on illegal tax breaks for Boeing. This would be the trigger for the EU to retaliate. The dispute has turned into the biggest and most expensive case ever in the history of the WTO.
An irresponsible battle that is risking jobs on both sides of the Atlantic
With fears of recession growing, the last thing workers need is another irresponsible and senseless battle between the US and Europe. The OECD warned in September that “escalating trade conflicts are taking an increasing toll on confidence and investment, adding to policy uncertainty, aggravating risks in financial markets and endangering already weak growth prospects worldwide”.
IndustriAll Europe fears that these tit-for-tat policies will slow down industrial production and risk provoking a global recession. Europe has 19 million workers producing goods for export and many jobs will be at risk. Economic nationalism might provide short-term benefits, but in the long run everyone will lose out by closing borders. The aerospace industry is organized in globally integrated supply chains and close to 40% of Airbus-related procurement comes from US suppliers. Therefore, the current surge in economic nationalism and “America First’-policies is a dangerous development, economically and politically. It will lead to a less secure world. Rather than confrontation, global cooperation is needed to address the many global challenges we have to confront: climate change, tax evasion, digitalisation, a low-carbon industry, growing inequalities, …
Stop lose-lose trade wars - work towards a negotiated settlement
The European Commission has tabled proposals to settle the dispute and remains ready to find a negotiated settlement. However, if the US decides to impose the WTO-authorised countermeasures, the EU will be pushed into a situation where it will have no other option than to do the same.
IndustriAll Europe therefore urgently asks both the US and EU leaders to stop lose/lose trade wars, to work towards a friendly resolution of trade disputes and to continue supporting multilateralism and global rules, for instance by reforming the WTO in order to increase its effectiveness and transparency.
“industriAll Europe has grave concerns about the current escalation of trade protectionism. Europe has 500.000 workers in the aerospace industry. We call on both trading partners to find friendly settlements for their trade disputes, in the interest of workers at both sides of the Atlantic. Nobody wins in a trade war, also American workers will eventually fall victim to US trade aggression. Therefore, we urgently call the US and the EU, before introducing punitive tariffs, to work together on a transparent, fair and enforceable system on state aid in the aerospace industry”, Luc Triangle, General Secretary of industriAll Europe said.
Contact senior policy adviser Guido Nelissen for more information or further comment.