USTR to Increase Section 301 EU Tariffs Jan. 12; EU Says Changes Exceed WTO Authorization

The additional Section 301 tariffs on goods from the European Union announced late Dec. 30 (see 2012300062) will take effect “with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Standard Time on January 12, 2021,” the Office of the U.S. Trade Representative said in a notice. USTR said in a Dec. 30 news release that it would increase the tariffs as part of the ongoing World Trade Organization dispute over Airbus subsidies. The announcement disrupts settlement talks and “exceeds the amount of retaliation authorised by the WTO,” a European Commission spokesperson emailed. “The Commission is analysing the data in detail and will look at all options available on how to respond.”

Products subject to the additional tariffs include “aircraft manufacturing parts from France and Germany, certain non-sparkling wine from France and Germany, and certain cognac and other grape brandies from France and Germany,” USTR said. The aircraft parts will be subject to a 15% additional tariff, and the wines and brandies, to 25% additional tariffs.

The increased tariffs come in retaliation for the EU’s decision to use “distorted” trade data from after the COVID-19 pandemic hit the global economy as the basis for its $4 billion in tariff retaliation as part of a related WTO dispute over Boeing subsidies. That meant the EU imposed tariffs “on substantially more products than would have been covered if it had utilized a normal period.” The U.S. says it asked the EU not to use that period, and it refused. The EC spokesperson responded Dec. 31 that the “by far most important factor impacting EU-US trade in the products concerned during that period was the well-known grounding of the Boeing 737 Max.”

The increase is necessary “to keep the two actions proportionate to each other,” USTR said. Rather than relying on calendar year 2019 data, as it did to calculate its retaliation in the Airbus case, USTR will now base the tariffs on the same period used by the EU. USTR said it is adjusting product coverage by “less than the full amount that would be justified,” but it warned the EU it must also adjust its Boeing tariffs to account for the timing of the United Kingdom’s exit from the trading bloc.