UK jobs now at risk due to EU - and illegal French and German state aid
USA wins WTO go-ahead to impose billions in punitive tariffs on all EU exports
French- and German-owned Airbus is at the centre of the dispute
A long-standing dispute between the USA and the EU over many years of illegal state subsidies to Airbus, principally by the French and German governments, is about to result in massive extra tariffs being imposed on all EU exports of goods and services.
This retaliation by the USA has been agreed by the WTO and will cost EU exporters (including those from the UK) $7.5 billion per year. The US plans to levy additional high tariffs on a wide range of goods and services, from Jaguar cars, to Cheddar and Stilton cheeses, to Scotch whisky.
These new costs will range from 10-25% on top of existing tariffs, making British goods uncompetitive in the US market and putting UK jobs at serious risk.
Brexit Facts4EU.Org Summary
WTO imposes $7.5 billion per year extra cost on EU exports
“WTO members agreed at a meeting of the Dispute Settlement Body (DSB) on 14 October to authorize the United States to impose countermeasures on European Union goods and services trade with the US up to a value of USD 7,496.623 million [[$7.5 billion] annually.”
By the end of this month the WTO’s final processes are due to complete. Brexit Facts4EU.Org has the full list of extra tariffs to be imposed by the USA on British products. These include an additional tax of 25% on items as diverse as Scotch malt whiskies, woollen and cashmere sweaters, and mens’ suits.
As an EU member, the UK is forced to have the EU Commission represent it at the WTO
Under EU rules, it is the EU Commission which acts for all EU member countries at the World Trade Organisation (WTO). The UK was a Founder Member of the WTO. Until it leaves the EU, it is the EU Commission that has the sole right to negotiate there on behalf of the UK and all other member countries.
Cecilia Malmström is the EU’s Trade Commissioner. She had no experience of trade when she was appointed by EU Commission President Jean-Claude Juncker in 2014. She has only ever worked as a translator and as a politician.
Here is how the EU describes her responsibilities:-
- Pursuing an ambitious trade agenda to the benefit of European citizens, SMEs and the broader economy.
- Representing the EU in the World Trade Organisation (WTO) and other international trade fora.
- Negotiating bilateral trade agreements with key countries – agreements that respect Europe’s safety, health, social and data protection standards, as well as our cultural diversity.
- Developing a strong foreign direct investment policy.
- Evaluating the use of Europe's trade defence instruments and deciding on the best way forward.
- Strengthening the EU's strategic partnership with Africa.
- Working with developing countries to include them in the world trading economy, and uphold European values such as human rights, social and environmental protection.
- EU Commission website, Nov 2019
The EU has dragged this out for 15 years – now President Trump has had enough
The USA first raised the issue of illegal state aid from EU governments for Airbus in 2004 – that's 15 years ago. The US Trade Department is now clearly in the mood to act, based on the final ruling from the WTO.
Observations
The complexities of this WTO case won by the USA against the EU are huge. It has taken a great deal of research before we could summarise the basics for readers. Naturally there have been a large number of twists and turns in this story, but we have tried to include the main points.
The intricacies are less important than the overriding issue at stake here. As a member of the EU, the UK cannot currently represent itself at the WTO. Only the EU Commission has the right to do this, and the head of EU Trade is the Swedish former politician Cecilia Malmström.
The actions of other EU member governments can result in major impacts on the jobs and livelihoods of people across the UK, as this case shows. It is only by leaving the EU that the UK government will finally be able to act in the interests of the British people.
The EU has a cunning plan
The EU is now talking of retaliation, but this will take time at the WTO. The EU is certainly forbidden from taking any retaliatory action immediately, under WTO rules.
The EU's counter-claim appears to be that Boeing has also received ‘state aid’ from the US government, by virtue of the fact that Boeing receives orders from the US Dept of Defense for its military aircraft.
Aside from the fact that government orders for military products from a commercial company would seem to be a normal activity rather than state aid, there may be a problem with the EU’s argument. EADS – which is the new overall group company name for Airbus – also has a military arm. It even has its own name: Airbus Military SAS. We are not lawyers, but this sounds like something which the USA’s trade attorneys are likely to seize upon.
Finally
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[ Sources: WTO | US Trade Dept | EU Commission ] Politicians and journalists can contact us for details, as ever.
Brexit Facts4EU.Org, 20 Nov 2019
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