European plane-maker Airbus today made what it described as a final step aimed at halting a transatlantic trade war over billions of dollars of aircraft subsidies.
The EU called Friday on the United States to lift tariffs imposed in a long-running dispute over aircraft subsidies after Airbus said it had brought itself into compliance with World Trade Organization rulings. The company said it had accepted higher interest rates on government loans it received from the French and Spanish governments to help develop its A350 jet.
The EU said it would retaliate with sanctions should that not happen.
The government loans are among European measures that the World Trade Organization (WTO) has deemed illegal subsidies as part of a pair of cases also targeting USA support for Boeing.
"In the absence of a settlement, the European Union will be ready to fully avail itself of its own sanction rights", he warned.
The European Union's (EU) failure to withdraw Airbus subsidies completely led to WTO approval for United States sanctions starting from late previous year on up to US$7.5 billion (RM31.98 billion) of European goods ranging from wine to whisky.
The WTO has faulted both Europe and the U.S. for doling out illegal support to their respective jetmakers. For the last eight years, the argument has mainly been about whether each side has obeyed those rulings.
"After 16 years of litigation at the World Trade Organisation, this is the final step to stop the long-standing dispute and removes any justification for USA tariffs", the company said.
In May, the USA declared itself in full compliance with WTO findings after Washington state abolished aerospace industry tax breaks that largely benefited Boeing.
The European Commission said this removes any grounds for the USA to maintain tariffs imposed on EU exports under WTO rulings as well as making a strong case for a rapid settlement of the dispute.
The Airbus move comes as industries hit by USA tariffs including Scotch whisky and Spanish farmers are increasingly complaining about being targeted as a result of the aircraft row and pressuring Airbus and governments to resolve the case.
They are frustrated at being dragged into a dogfight between aerospace giants just when their own industries are also having to cope with the impact of the coronavirus epidemic.
Airbus said USA airlines that had ordered Airbus jets were also among those being hurt by the tariffs.
European officials say they have grounds to quash the U.S. tariffs but that they have been thwarted by a procedural row at the WTO after Washington blocked appointments to its appeals body.
In 2019 the WTO authorised the U.S. to impose up to 100 percent in taxes on $7.5 billion of European goods, its biggest ever penalty. "It is a way to show good faith and open the door to find a solution", a European industry source said, referring to the loan decision.
A USA source said that any concessions from Airbus would be welcome but would have to be studied in detail.