EU institutions and trade bodies have reacted cautiously to negatively to a decision by the Office of the United States Trade Representative (USTR) to keep its existing tariffs on European products in retaliation for state aid to Airbus but also to abstain from imposing new levies.

The USTR, a federal government agency developing and proposing trade policy to the US President, has thus decided to hold off on a previously threatened boost in tariffs on USD 7.5 billion worth of EU and UK goods.

The decision is the latest move in a 16-year-old trade dispute between the two sides of the Atlantic over state subsidies for the two aircraft-making giants, Europe’s Airbus and America’s Boeing.

In October 2019, the US received a permission from the World Trade Organization (WTO) to impose tariffs as a lawful retaliation to illegal subsidies for Airbus provided for the launch of its jets A380 and A350 jets.

The US government is obliged by law to make periodical reviews to its tariffs.

In February 2020, the US raised the rates being charged on aircraft from 10% to 15%, and left uncharged the 25% duty on other items, and over the summer US officials threated to raise the tariffs further or slap tariffs on new items such as salmon fillets, gin, and olives.

Instead, the USTR announced small changes to the “Airbus tariffs” by removing Greek cheese and UK biscuits, and adding jams made in Germany and France.

“The EU and member states have not taken the actions necessary to come into compliance with WTO decisions,” America’s top trade official, USTR head Robert Lighthizer, said on Wednesday.

“The United States, however, is committed to obtaining a long-term resolution to this dispute,“ he added.

The European Commission, the executive of the EU, which handles the Union’s external trade negotiations, did welcome cautiously the American announcement.

“The Commission acknowledges the decision of the US not to exacerbate the ongoing aircraft dispute by increasing tariffs on European products,” an EU spokesperson said, as cited by Reuters.

Airbus spokesman Clay McConnell reacted in a statement on Wednesday by expressing disappointment with the US decision to keep the tariffs.

“[Airbus] profoundly regrets that, despite Europe’s recent actions to achieve full compliance, USTR has decided to maintain tariffs on Airbus aircraft – especially at a time when aviation and other sectors are going through an unprecedented crisis,” he said.

Last month Airbus promised to change some deals that triggered the dispute, and argued that those changes, such as upping its interest rates on French and Spanish government loans removed “any justification” for US tariffs. This in turn led EU officials to demand the end of the American tariffs in question.

Meanwhile, the EU is also challenging US government subsidies for Boeing at the WTO, with a decision expected later this year.

EU trade bodies have reacted negatively to the announcement of the USTR on continuing the “Airbus tariffs”.

The French wine and spirits exports federation FEVS said the decision “will continue to heavily penalize French exporters,” as cited by DW.

The Scottish Whisky Association said the tariff is “inflicting huge damage,” with exports down 30% since the tariff came into effect.

(Banner image: USTR on Twitter)