WTO rules EU can impose $4bn tariffs on US goods

14th October, 2020 by Melita Kiely

The World Trade Organization (WTO) has ruled the EU can impose almost US$4 billion in tariffs on US products in response to the ongoing aircraft dispute, as distilled spirits including Scotch and American whiskey remain targets of the trade war.

Trade bodies on both sides of the Atlantic continue to call for the urgent removal of tariffs

The latest WTO report allows the EU to react to tariffs imposed by the US following a WTO ruling last October, which allowed the US to introduce tariffs on US$7.5 billion worth of EU goods, including single malt Scotch and single malt Irish whiskey.

The trade war between the US and EU stems from a 16-year dispute between European manufacturer Airbus and US-based Boeing. In 2004, the US took the EU to the WTO over subsidies to Airbus, and the EU retaliated with a case against the US against support for Boeing.

In addition to tariffs from the US, the spat has also seen the EU introduce tariffs on US goods, including American whiskey.

Trade body the Distilled Council of the US (Discus) has once again raised the need for negotiations between the US and EU in order to resolve the tariff issue.

Discus said in a statement: “Instead of further escalation, we hope the US and the EU will come back to the negotiating table and agree to the immediate and simultaneous removal of tariffs on other distilled spirits.

“The EU previously indicated it may impost tariffs on US rum, brandy and vodka in this dispute. The escalation of tariffs on the distilled spirits sector, by either the US or EU, will only increase harm to our industry, which is unrelated to the trade dispute.

“The spirits industry and hospitality sector are facing incredible economic harm due to the mandatory closings of restaurants, bars and distillery tasting rooms in response to the outbreak of Covid-19. An immediate restoration of duty free access for all distilled spirits is essential to returning our industry to supporting jobs on both sides of the Atlantic.”

In August this year, the Scotch Whisky Association (SWA) condemned the US government’s decision to retain a 25% tariff on single malts, warning it has resulted in an almost US$300 million (US$392m) loss for the industry.

The SWA welcomed the latest WTO report, but reiterated the need to swiftly resolve the tariff dispute – particularly in light of the challenges presented by the Covid-19 pandemic.

A spokesperson for the SWA said: “We welcome the publication of the World Trade Organization’s decision on the countermeasures the EU can impose in respect of US subsidies to Boeing as a necessary, final step in the Airbus/Boeing litigation.

“We continue to urge all parties to the dispute to act quickly now to settle it, and remove tariffs on Scotch whisky and other unrelated products. These are doing significant damage to our industry. Our losses are mounting and the situation is threatening businesses and jobs, just when the focus should be on the Covid recovery.”

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