EU Trade Commissioner Says US Says EU Settlement for Airbus Not Enough

The tariffs on billions of dollars worth of European goods because the World Trade Organization found the EU illegally subsidized Airbus puts Europe in a position where it will need to take similar action, assuming the WTO rules that state tax credits for Boeing also distorted trade. “This is where I don't want to be,” European Union Commissioner Phil Hogan said during a press roundtable with reporters late Jan. 16.

Hogan said the EU offered what it thought would work as a negotiated settlement, and the U.S. said, “the initial proposals that we offered didn't go far enough.” He said he'd like to see the U.S. put a proposal on the table of what “they'd like to see in a negotiated outcome.”

But, he said there is engagement on aircraft subsidies, and so reaching a settlement is possible.

“We want to deal with this issue in a comprehensive way,” Hogan said, not just addressing the subsidies that were in the cases, but also agreeing on what kinds of government support are acceptable going forward. He said if the U.S. and Europe can't agree, they could find themselves at a disadvantage to other companies' developing civil aviation industries.

In addition to discussing Airbus, Hogan and government representatives -- he met with the U.S. trade representative, the Treasury secretary, the Senate Finance Committee chairman, the Ways and Means Committee chairman and ranking member -- talked about the Digital Services Tax that France is considering. The USTR is proposing tariffs on French champagne and other products in retaliation for the DST; Treasury Secretary Steven Mnuchin is negotiating with the French finance minister to reach a compromise to avoid tariffs.

Hogan said tariffs weren't talked about directly, but said that American officials “did express a strong view that they didn't agree with the French government.”

He said that while the WTO is where such disputes could go, he does understand “the strength of feeling” American officials have on the issue.

Hogan also said there was no mention at all of the possibility of 25 percent tariffs on European cars, which supports comments made by a White House adviser that the tariffs are off the table (see 2001100055). Hogan, who was responding to a German reporter's question, said, “I think that should be good news in Germany.”

Ways and Means Committee Chairman Richard Neal issued a statement after his meeting with Hogan that said: “Commissioner Hogan and I had a frank and productive conversation regarding the U.S.-EU trade relationship and the areas in which that partnership can improve and grow. Priority matters I raised include the need for the EU to resolve the dispute over Airbus subsidies and my support of a multilateral process on our digital services tax disagreement. In particular, regarding digital taxes, I reiterated how critical it is for American workers, businesses, and wine producers that the issue not persist and spark the imposition of severe tariffs.”

Hogan said the U.S. and Europe “are not far off of concluding” harmonizing some regulatory approaches that could help reduce trade friction. He said there was some progress made on that this week, and that he'd be returning in February and March to talk more.

But there is an impasse on beginning discussions on reducing industrial tariffs, Hogan acknowledged, because the EU is sticking to its position that agriculture should not be part of the trade negotiations. Hogan said he was asked again about that in Washington this week, and said, “I said no to putting agriculture on the table because [government] procurement and maritime aren't on the table.” He's referring to the Jones Act, which restricts foreign shipping companies from carrying cargo in certain circumstances.

However, Hogan said there could be a way around the agricultural issue, by addressing sanitary and phytosanitary standards on both sides. The mandate that the European Commission has from member states explicitly excludes agriculture from negotiations, but he said this would be a way around having to get a new mandate, and therefore would be speedier.

Congressional leaders did not respond to questions Jan. 17 on whether this approach would be acceptable.

Hogan spoke positively of his first visit to Washington as trade commissioner, and said he and U.S. Trade Representative Robert Lighthizer are equally undiplomatic. “Sometimes we like the messages, and sometimes we don't, but at least we know where we stand. That's my style as well.”