Custom, EU – Baltic States, Taxation, USA

On October 2, an arbitrator of the World Trade Organisation announced its decision in a dispute between the European Union and the United States of America concerning state aid (subsidies) to aircraft manufacturer Airbus. The U.S. has been entitled to impose countermeasures of USD 7.5 bn (EUR 6.9 bn) with respect to goods originating in the EU.

In the dispute settlement procedure that took several years, the WTO has found that an EU aircraft industry company Airbus has received competition-distorting subsidies. To compensate for the losses, the WTO has authorized the U.S. to apply countermeasures in the form of increased duties on imports from the EU.

The U.S. has already launched a statement on the intention to begin applying additional import duties – 10% for aircraft and 25% for other goods – on specific groups of products if EU Member States. See a provisional list of products on the website of the Office of the United States Trade Representative.

The U.S. is planning to increase duties on imports from France, the United Kingdom, Spain and Germany, who directly subsidized Airbus. The exports from other EU countries, including Latvia, to the U.S. will be affected to a lesser extent. According to the provisional list, additional duties will be imposed on dairy products (butter, cheese), pork sausages and similar pork products, and frozen fruit, which amounts to EUR 0.48 mln or 0.09% of Latvia’s total exports to the U.S. in 2018.

It should be noted that in the context of this dispute, similar rights are expected to be granted to the EU over U.S. non-compliance with WTO rules and support for Boeing. The arbitrator’s decision on the amount of countermeasures in this case against the U.S. is due in the first half of 2020. The WTO is expected to be granted rights to increase import duties on goods and products originating from the U.S. The European Commission is currently negotiating with the U.S. and has offered proposals to achieve a fair settlement thereby avoiding the mutual imposition of countermeasures.