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Tao Duanfang Financial Columnist
On October 13, the World Trade Organization (WTO) approved the European Union to impose punitive tariffs of no more than US $ 4 billion on US exports to Europe in light of the huge subsidies given by the US government to Boeing. .
The United States and Europe have a long history of anti-subsidy lawsuits involving the world’s two great airliner giants: Boeing and Airbus. As early as 2004, the two parties started the first round of mutual complaints. The most recent round came after Trump assumed the presidency of the United States. , The United States asked the WTO to allow it to impose punitive tariffs of up to US $ 11 billion on the EU on the grounds that the four EU countries (i.e. France, Germany, Spain and the UK that participate in the Airbus program) improperly invested in state Airbus subsidies. On October 1, 2019, the WTO allowed the US to impose punitive tariffs of no more than 75% on EU products exported to the US starting on October 18. The United States immediately announced that it would impose additional tariffs on aircraft, wine, and other products exported from the European Union to the United States, including aircraft at 10% and agricultural products at 25%.
Regarding the US gain In October last year, the European Union immediately expressed its discontent and filed an appeal and a counterclaim with the WTO together with France and Spain, accusing the US federal and state governments. From Boeing’s tax cuts as “ improper state subsidies. ” In the final WTO decision, the EU can impose a “Boeing tax” on US products exported to Europe as of October 27.
This move created a dilemma for Great Britain.
As we all know, the successful Brexit is no longer a member of the EU. Although it is still in the transition period, the probability of a no-deal Brexit is increasing by the day. In this circumstance, there are voices in the UK who advocate not following the EU imposition of a “Boeing tax” on the US.
But this is easier said than done.
As the largest, most important and most successful multinational cooperation project in post-war Europe, British Aerospace has a 20% stake in the Airbus project. 14,000 British employees work for the Airbus project and their interests are closely related to each other like a spider’s web. Since the beginning of the Airbus subsidy dispute, the UK has always been a member of the “Airbus Big Four” with Airbus for 16 years, playing a unique role in communicating with the US as a spokesperson for the “Big Four” . Staying out of the “Boeing tax” issue this time will inevitably make the relationship between Britain and Europe more complicated, thus jeopardizing the future of the Airbus project and damaging Britain’s own strategic interests.
In fact, the news that the WTO will approve the EU to impose a “Boeing tax” on the United States was first reported exclusively by UK media Reuters. This also reflects the British government’s sensitivity and opposition to this issue and the British government’s dilemma on this issue.
In this regard, there are views in the UK that it could use this opportunity to use “the UK to cooperate with the EU in imposing a ‘Boeing tax’ on the US” as a bargaining chip in exchange for the concessions of the EU on issues such as the customs union and the tariff situation in Northern Ireland. However, more observers noted that this move will only rejuvenate and irritate European countries towards Britain and may not lead to maximizing Britain’s interests.
Faced with a difficult dilemma, the UK Department of Commerce remained silent, while the Cabinet stated that “while seeking to resolve disputes through negotiations, it is exploring all options.”
The EU has also “think carefully”. On October 18, the executive director of the European Aviation Safety Agency, Kay, stated that the upgrade of the Boeing 737MAX flight control system on the ground has met the agency’s requirements. This means that this best-selling model is expected to be available before the beginning of December. This is the favor of the EU to Boeing and the United States. After all, Boeing’s airliner exports to the EU in 2018 reached US $ 46.5 billion.
If that fight is not broken, the UK can breathe a sigh of relief and continue to live in the dual identities of “Airbus Big Four” and “America’s Good Partner”.
This is not easy. Europe and the United States have been fighting for “state subsidies” from Boeing-Airbus for 16 years. The essence is the struggle between Europe and America for the dominant position in the market for the most profitable large-scale civilian equipment of the contemporary era. There will be a mess and it is still difficult for Britain to shake off the shame of the dilemma.
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