For 15 years, the United States and the European Union have been involved in disputes before the World Trade Organization (“WTO) concerning subsidies on commercial aircraft. The disputes have resulted in findings by WTO panels and the Appellate Body that the United States and the European Union (“EU”) have provided subsidies to Boeing and Airbus, respectively, that are inconsistent with their WTO obligations.

Since these findings, the United States and the EU have had the opportunity to bring their policies into conformity with their WTO obligations. In late 2018 and March 2019, however, the WTO concluded that neither the United States nor the European Union were in full compliance with their obligations regarding the aircraft subsidies. In response, both the United States and the European Union invoked their right to retaliate against one another under the WTO agreements.

On April 12, 2019, the Office of the United States Trade Representative (“USTR”) initiated an investigation to determine the extent to which the United States should retaliate against the European Union. As part of this investigation, USTR released a list of $25 billion worth of EU goods (covering a range of products from aircraft parts to Italian cheeses) that would be subject to additional duties of up to 100 percent.

On October 2, 2019, the arbitration panel in the dispute determined that the United States could impose retaliatory tariffs on approximately $7.5 billion worth of European goods annually. The award must be still adopted by the WTO Dispute Settlement Body (“DSB”). As a result, the United States has asked the DSB to approve the panel’s decision in a special meeting on October 14, 2019. According to the United States Trade Representative’s office, the DSB will automatically approve the decision at the requested meeting. Cecilia Malmstrom, the EU’s Commissioner for Trade, has stated that, if the United States actually imposes these tariffs, the EU will be forced to take its own retaliatory actions against the United States.