WTO to back US tariffs over Airbus subsidies

The World Trade Organization is poised on Wednesday to open the door to hefty US tariffs on European goods over illegal subsidies for Airbus, pushing a 15-year-old row over support for plane giants to the center of fraught global trade relations.

The Geneva body said it would publish at 4 p.m. local time (1400 GMT) its decision on a US request to impose up to $11.2 billion in tariffs on European Union goods, but people close to the case expect WTO arbiters to reduce that by about a third.

The WTO has found that both Europe’s Airbus and its US rival Boeing received billions of dollars of illegal subsidies in a pair of cases dating back to 2004. Both cases are expected to lead to tariffs, deepening transatlantic trade tensions.

A three-person WTO arbitration tribunal is expected to announce that the United States suffered harm equivalent to roughly $7.5 billion a year from discounted European government loans for the Airbus A350 and A380 passenger jets - a decision that would allow Washington to hit goods worth the same amount.

The focus of nervous global financial markets will then shift to Washington where the US Trade Representative is expected to move quickly to narrow down a preliminary list of goods in line for tariffs. The agency’s provisional list of products that are eligible to be targeted covers goods with an annual trade value of $25 billion and ranges from Airbus jets themselves to helicopters, wine, handbags and cheese.

Before any tariffs are imposed, the WTO’s Dispute Settlement Body must formally adopt the arbiters’ report in a process expected to take between 10 days and 4 weeks.

Its next scheduled meeting is on Oct. 28, but Washington could request a special meeting 10 days after the arbiters’ report is published, suggesting an earliest possible final nod on Oct. 12.

The WTO’s decision on EU retaliation rights related to Boeing subsidies is expected early in 2020.

On Tuesday, the head of Irish budget airlines group Ryanair urged the United States and EU to pull back from the brink of a tariff war and said neither side’s aviation industry would survive a long dispute.

Importers led by US airlines that buy Airbus jets have urged Washington to be selective when choosing industries to hit in order to avoid causing collateral damage to the US economy.

Signs that the record corporate trade dispute involving Airbus and Boeing - the largest case ever handled by the WTO - is reaching a climax after years of arcane headlines and thousands of pages of rulings have weighed on European shares.