U.S. tells WTO 'no valid basis' for EU tariffs in Boeing-Airbus subsidy fight

WASHINGTON (Reuters) – The United States told the World Trade Organization on Wednesday it has fully complied with WTO findings that Washington state’s now-repealed tax breaks for Boeing (BA.N) were illegal and there was “no valid basis” for the European Union to retaliate against U.S. goods.

The formal submission to the WTO aims to neutralize the EU’s demand for retaliatory demands for some $10 billion annual retaliatory tariffs in a long-running Boeing-Airbus (AIR.PA) subsidy dispute, the U.S. Trade Representative’s office said.

The WTO last year granted Boeing the ability to levy tariffs on $7.5 billion worth of EU goods, including aircraft, wines and cheeses, due to Airbus subsidies deemed illegal.

USTR raised tariffs on Airbus planes to 15% from 10% on March 17, but many airlines are delaying deliveries as the coronavirus pandemic has halted most travel.

Washington state’s legislature in March repealed the preferential aerospace tax break first introduced 16 years ago, which saved Boeing some $118 million in 2018 based on published jetliner revenues.

“With Washington State’s repeal of this relatively minor tax reduction, the United States has fully implemented the WTO’s recommendation, ending this dispute,” U.S. Trade Representative Robert Lighthizer said in a statement. “This step ensures that there is no valid basis for the EU to retaliate against any U.S. goods.”

The WTO is widely expected to issue a decision on the EU retaliation demands in June. Meanwhile EU officials have emphasized their desire to negotiate an end to the dispute, which dates back to 2004.

An Airbus spokesman could not be immediately reached for comment on the USTR notification.

Boeing last week declined to seek aid from the U.S. government $17 billion coronavirus relief fund for aerospace and other national security-linked firms after it raised $25 billion in a corporate bond offering.

USTR launched formal negotiations with Britain on Tuesday for a post-Brexit free trade agreement between the transatlantic allies.

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