Lighthizer Says Possible to Resolve Airbus Tariffs on British Goods Separately From EU

U.S. Trade Representative Robert Lighthizer, when asked about how the retaliatory tariffs over Airbus subsidies are affecting the U.K. trade talks, said it's possible, but tricky.

More broadly on how to resolve the Airbus tariff matter, Lighthizer said during a webinar with the British think tank Chatham House July 9, that it will take more than European countries committing not to subsidize an Airbus plane launch again. He said he expects the EU to pay back “some element of the subsidy, and that's tricky, because people don't have the same number.”

Lighthizer also talked about Section 301 tariffs that could come on other European products because of the U.S. determination that digital service taxes are discriminatory against American firms. “We’re going to announce we're going to take certain sanctions on France, suspending them, like they’re suspending collection,” he said. The other Section 301 investigations, against Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey and the United Kingdom (see 2006020043), have not been completed.

Lighthizer said he agrees there's a problem with taxation of foreign operations of multinationals, and it's not just in companies like Facebook and Amazon. “There is a problem with companies that make a lot of profit in a country, they don’t have a nexus, they don’t get taxed there,” he said, and he particularly criticized companies that locate intellectual property in low-tax countries, such as Ireland, and then have other countries' operations pay licensing fees to that subsidiary to raise their expenses, and therefore lower their tax liabilities, in other countries. “It drives manufacturing, too,” he said. “It's a completely stupid policy.... Border adjustability was supposed to be fixed in the last tax bill and ended up not getting fixed for a lot of political reasons.”

But he said the answer is not to target a handful of American tech firms. “They didn’t even do a clever job of veiling the fact they were just trying to get in the pocket of U.S. companies,” Lighthizer said of countries' DST proposals.

Chatham House Director Robin Niblett asked Lighthizer how sustainable the administration's reliance on tariffs is, and said, “Tariffs surely are a very blunt instrument.”

Lighthizer said that in the past, trade policy put way too much emphasis on the consumer, and not enough on how people without college degrees could have dignified work and a place in the middle class. He said that while there's a balance between valuing business efficiency and preventing offshoring of manufacturing jobs, “I don't think we're even close” to going too far on the pendulum.

“On the question of tariffs, are tariffs a perfect instrument?” Lighthizer asked rhetorically, and said the answer is no. “But is there another instrument? I don’t know of it.”

The largest amount of tariff revenue is coming in from the trade war with China, and Lighthizer was asked what the end goal is with the U.S.-China strategy.

Lighthizer said he can't speak to the defense and cyber issues with China, but said that in the economic area, what he called “my lane,” the U.S. has to stop China's aggressiveness.

He said countries must come together -- either through the World Trade Organization or in another venue -- to create rules that allow market economies to thrive while trading with countries that are state-run capitalism. “Creating rules that benefit all of us is in our interest, we haven’t done that yet,” he said. “If it’s possible, we’ll do it. They have to benefit everyone. If it’s not, we’ll just end up with a situation where we end up with chaos.”