THE European Union on Tuesday won the right to impose tariffs on US$4 billion in U.S. goods in retaliation against subsidies for planemaker Boeing, deepening a record trade spat that has already prompted Washington to slap duties on EU imports.

The World Trade Organization (WTO) tariff award threatens to intensify transatlantic trade tensions just three weeks ahead of the U.S. presidential election.

However, negotiators on both sides say it could also lead at last to discussions to resolve a 16-year legal battle over subsidies to aircraft manufacturers Boeing and Airbus.

Both the United States and the EU have signalled interest in settling the dispute over planemaker subsidies, while accusing the other of refusing to talk seriously.

Tuesday’s decision, delayed by the COVID-19 pandemic, follows a WTO ruling last year prompting Washington to begin imposing tariffs on US$7.5 billion in EU goods over state aid for Airbus, which has sites in Britain, France, Germany and Spain.

Combined, the two cases represent the world’s largest ever corporate trade dispute.

Consuming thousands of pages of testimony and an estimated US$100 million in costs since 2004, the aircraft spat has tested the resolve of the WTO, which is busy selecting a new leader.

The state of Washington has since repealed an aerospace tax break that benefited Boeing, while Airbus has announced it will increase loan repayments for the A350 plane to France and Spain in bids to settle the matter.

The U.S. Government said there was no legal basis for the EU to impose tariffs since the contested tax break had been eliminated, a view echoed by Boeing which said it had already complied with WTO findings.

The EU says the same is true of U.S. tariffs imposed against subsidies to the A380 superjumbo, which is being taken out of production. But the two sides were left sparring over how genuinely they were trying to end decades of aerospace support.

U.S. Trade Representative Robert Lighthizer said any move by the EU to slap tariffs on U.S. goods would be “plainly contrary to WTO principles and will force a U.S. response.”

The European Commission, backed by Airbus, said it would pull back from imposing duties if Washington withdrew its existing tariffs on European goods such as wine and whisky. The two sides could then work together to find common ground.

The latest chapter in the mammoth dispute rattled the spirits industry on both sides of Atlantic, which urged restraint and an end to tariffs. EU producers have already been hit with tariffs and U.S. makers are now in EU cross-hairs.

U.S. products on a target list for EU sanctions include airplanes, wine, spirits, suitcases, tractors, frozen fish and produce from dried onions to cherries.

The earliest the EU could act is after a WTO meeting Oct. 26, but few analysts expect it to do so before U.S. elections.

The US$4 billion tariff window means European airlines that import Boeing jets could have to pay tariffs expected to match U.S. border taxes on Europe-built Airbus jets, currently 15 percent.

But Boeing’s top European customer Ryanair has called on Boeing to pay the tariffs and is expected to use this as leverage in negotiations to buy more of its grounded 737 MAX.

(SD-Agencies)