The WTO has ruled the EU can impose around $4 billion in tariffs on US goods in retaliation for Boeing subsidies

ReutersEuropean Union flags fly outside the European Commission headquarters in Brussels
  • The WTO ruled on Tuesday the EU can impose tariffs on about $US4 billion worth of US goods in retaliation for subsidies granted to aircraft maker Boeing.
  • The US took European countries to WTO in 2004 for subsidies to rival aerospace firm Airbus, and the EU reciprocated with a case against US support for Boeing.
  • In October last year the WTO ruled the US can impose tariffs on $US7.5 billion of EU goods over its state aid to Airbus.
  • Visit Business Insider’s homepage for more stories.

The European Union won the right on Tuesday to impose tariffs on about $US4 billion of US goods in retaliation for subsidies granted to aircraft manufacturer Boeing, following a ruling from the World Trade Organisation.

The decision is part of a trade dispute that has lasted for nearly 16 years, but the ruling could worsen transatlantic relations, just weeks before the US election.

It allows the EU to respond to tariffs set by the US following a WTO ruling last October under which the US won the right to impose tariffs on $US7.5 billion of EU goods, affecting aircraft parts and luxury goods over state aid support for Airbus.

Trade tensions between the US and Europe have escalated over the past few years, particularly under the Trump administration.Airbus and Boeing, the world’s two largest plane makers have for years accused the other of unfairly receiving billions of dollar in government subsidies. Airbus is based in Europe, while Boeing is in the US.

The US first complained to the WTO in 2004 about EU subsidies for Airbus, which has sites in Britain, France and Germany. The EU reciprocated with a case against US support for Boeing.

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EU officials have recently said they were hoping to reach a settlement with Washington, so the ruling doesn’t mean the bloc will immediately adopt the tariffs.

The EU Chair of the Committee on International Trade Bernd Lange, said in a statement following the ruling: “I sincerely hope that this decision will work as an incentive to end these disputes through a negotiated settlement. That should remain the absolute priority because, in times like these, we should, more than ever, work together and not against each other.”

“Therefore I call on both sides to enter into negotiations to reach a long-term agreement on civil aircraft subsidies. The mini-deal concluded between the EU and the US has already created a momentum,” he added.

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But he said in the absence of “constructive” US engagement, even after the November presidential elections, the EU will “enforce its rights” by putting in place the tariffs.

The US said in June it was considering imposing new tariffs on $US3.1 billion of European goods, with products like olives, beer, gin, and planes on the list.

Earlier this year the US increased tariffs from 10% to 15% on imports of Airbus’ aircraft and parts.

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