The United States has announced is it considering applying import tariffs to a number of European products exported to the US, including beer, gin and olives.
The threat is the latest move in a trade dispute that has been dragging on for 16 years, and concerns state aid by the US to aircraft manufacturer Boeing, and on the other side by the EU to Airbus.
Both sides claim the subsidy given by the other to its domestic producer is illegal, while defending their own subsidy n what amounts to no more than a tit-for-tat basis.
On the international stage, as within the EU itself, state aid to industry is considered against the rules unless very strictly limited, because it is seen as a distortion of free and open competition.
The US Administration under President Trump has shown itself ready and willing to use trade tariffs as not only an instrument of trade policy but also of foreign relations in general.
The World Trade Organisation (WTO) last year approved US tariffs worth $7.5 billion on European exports of wine, cheese and aircraft. Such tariffs have the effect of making European products more expensive for American importers, and therefore less competitive.
Someone intent on buying a Bordeaux wine, however, has no option but to pay the higher price, some of which now goes to Washington. Critics of the wholesale use of tariffs point out that the main victim is not always the exporter.
Often, in cases where the imported product is not able to be substituted, such as a Chimay beer, the American consumer pays the price.
“Trade sanctions on European imports are short-sighted and counterproductive, and threaten to cause significant damage to citizens and businesses on both sides of the ocean,” the EU Commission said in a statement at the time.
Now, Washington is stepping up the long-running aircraft dispute by threatening to impose punitive tariffs on imports from the EU of beer, gin and olives.
The WTO has not reacted to the latest US threat, and in fact is still considering a proposal from the EU to impose tariffs of its own in response to the cheese and wine tariffs of last year.
The WTO verdict was originally expected in May or June, but has now been pushed back like everything else by the coronacrisis.
Alan Hope
The Brussels Times
