Scottish Whiskey, French Wine and Italian Cheeses Targeted For Tariffs

October 4, 2019 by Dan McCue

WASHINGTON – Scottish whisky, French wine and Italian cheese all could feel the wallop of hefty tariffs now that the World Trade Organization decided it will allow the United States to place tariffs on $7.5 billion of European Union goods.

During an otherwise testy press conference at the White House Wednesday afternoon, President Trump applauded the WTO ruling that Airbus, the European rival to U.S. aerospace giant Boeing, received illegal subsidies.

“We’re having a lot of wins at the WTO since I started,” Trump said, interrupting during a question posed to Sauli Niinistö, the visiting president of Finland.

“The wins are happening now because they think I don’t like the WTO and they want to make sure I’m happy,” President Trump continued.

He went on to say the countries involved in the long-running dispute — identified by the WTO as Germany, France, the United Kingdom, and Spain — have been “ripping off the United States for many years.”

“They know that. I’m wise to it. … this is a $7 billion win. Not bad,” Trump said.

The award of $7.5 billion annually is by far the largest award in WTO history—nearly twice the largest previous award. 

The arbitrator calculated this amount based on WTO findings that EU aid for Airbus is causing significant lost sales of Boeing large civil aircraft, as well as impeding exports of Boeing large aircraft to the EU, Australia, China, Korea, Singapore, and UAE markets. 

Under WTO rules, the arbitrator’s decision is final and not subject to appeal.

The U.S. said it will impose 10 percent tariffs on aircraft and 25 percent on food and industrial products. The levies on French wine, Italian cheese, Irish and Scotch whiskies and other items are set to take effect Oct. 18.

An eight-page list of items subject to tariffs includes everything from men’s suits and women’s nightdresses to various meats, coffee, waffles, cookies, olive oil and olives.

President Trump is also expected to decide by Nov. 13 whether to tax cars and auto parts from Europe.

“For years, Europe has been providing massive subsidies to Airbus that have seriously injured the U.S. aerospace industry and our workers. Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies,” said U.S. Trade Representative Robert Lighthizer in a written statement.

He added that he expects to soon enter into negotiations with the European Union aimed at “resolving this issue in a way that will benefit American workers.” 

The tariffs being imposed by the White House are its severest trade action against the EU since it slapped the bloc with steel and aluminum duties last year.

The new duties will have far-reaching effects on the aviation industry, raising the costs for airlines and likely meaning higher fares for travelers. It could also have far reaching effects on the world trade and logistics sector, where high-end and time-sensitive items, like flowers and medicines often move by air.

In the wake of the decision Airbus urged the U.S. and the European Commission to avoid a trade war that would damage the global economy.

“Airbus is therefore hopeful that the U.S. and the EU will agree to find a negotiated solution,” Chief Executive Guillaume Faury said in a statement.

The EU hasn’t definitively said what it will do if the U.S. tariffs go into effect.

Under the rules of the WTO, the European Union is not allowed to impose retaliatory countermeasures in response to the decision.

However, another case likely to be decided soon could loosen its hand.

The WTO has already found Boeing received billions of dollars of illegal subsidies in a case dating back to 2005 and trade arbitrators are expected later this year to allow the EU to impose its own retaliatory tariffs on US imports.

Separately, the WTO is reviewing US tariffs the steel and aluminum that the Trump administration imposed on national security grounds.

The EU maintains the tariffs are protectionism and has imposed its own retaliatory tariffs.

“If somebody is imposing tariffs on our aviation companies, we will do exactly the same,” European Commission President Jean-Claude Juncker said Wednesday night at an event held by the American Chamber of Commerce to the European Union.

In a statement, European Commissioner for Trade Cecilia Malmstrom said, “If the US decides to impose WTO authorized countermeasures, it will be pushing the EU into a situation where we will have no other option than to do the same.”

In the meantime, France’s Ministry for Europe and Foreign Affairs on Wednesday focused on the pending Boeing case in a lengthy response. It noted that the WTO’s appellate body has already confirmed the U.S. has not withdrawn a total of $5 billion in subsidies it provided to Boeing despite their being prohibited under WTO law.

According to the French Ministry, Boeing received the subsidies in dispute between 1989 and 2006, and that the U.S. has continued to provide the aerospace giant with “massive and continuous support” since then.

“The escalation of trade tensions with our American partner and ally is not advisable and will have significant impacts on both of our economies, international trade, and the aviation industry,” the Ministry said, adding, “the EU would prefer an amicable settlement in this 15-year-old dispute and the development of new common rules on government support for aviation companies.

“Unfortunately, the U.S. does not seem prepared to negotiate at this stage. We are therefore responding firmly and will defend European interests by imposing the retaliatory measures authorized by the WTO against the United States,” the statement continued.

The Federation of French Wines and Spirits Exporters also expressed regret over the decision and the looming trade war.

“This is bad news for the sector and for our producers. We deeply regret this decision, which goes against free trade,” said Antoine Leccia, President of FEVS, at a press conference Wednesday.

“The introduction of these customs duties will severely impact French wine producers and exporters, but also our customers and consumers in the United States. Customs duties are good news for no one,” Leccia continued.

“In this conflict, which is entirely unrelated to our sector, we solemnly ask the French and European authorities to find, without delay, a negotiated solution to the dispute between them and the United States in the aeronautical field and thus to obtain the removal of the additional tariffs that arbitrarily affect French wines,” he said.

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