The WTO authorises the European Union to impose trade sanctions on the United States

The Dispute Settlement Body of the World Trade Organisation (WTO) on Monday 26 October formally authorised the European Union (EU) to impose sanctions on trade in goods and services from the United States worth $4 billion a year for the illegal subsidies that the United States granted to the aircraft manufacturer Boeing.

This new ruling is a further chapter in the EU's and the US' 15-year long dispute within the WTO over state subsidies received by the world's two largest aircraft manufacturers, Europe's Airbus and its US rival Boeing.

The multilateral body ruled in October 2019 that the subsidies granted by the European consortium countries (Germany, Spain, France and the UK) to Airbus were incompatible with international trade rules. It therefore authorised the United States to impose countermeasures through additional tariffs on European products worth up to $7.5 billion.

The increase in tariffs mainly concerned exports of aircraft and various agricultural goods produced by the countries in the consortium and has seriously affected the evolution of sales of Spanish products such as olive oil, wine, olives and cheese on the US market in recent months.

After postponing its decision due to the spread of the coronavirus pandemic, on 13 October this year the WTO resolved the arbitration in the Boeing case, ruling in favour of the EU and authorising the imposition of tariffs on US exports, but it was on 26 October that this resolution was formalised after the approval of the 164 members of the trade body.

After hearing the news, EU Trade Commissioner Valdis Dombrovskis said that the formal approval "confirms the EU's right to impose sanctions for illegal subsidies on US aircraft manufacturer Boeing" and stressed that the European Commission is preparing countermeasures in coordination with Member States.

"The solution we prefer is a negotiated agreement with the US," said Dombrovskis, who also stressed that they continue to work with US partners to reach this agreement.

However, the Trade Commissioner also warned that "the EU will be ready to take action in line with the WTO ruling in the event that a negotiated solution is not reached".

Indeed, the Commission said that it was finalising the process of working with Member States to use these retaliatory rights in the event that there was no progress towards a mutually beneficial solution in the near future.