The European Union is not happy with proposal of United States that targets tariffs on goods from the region after WTO ruled to grant subsidies go aerospace firm Airbus. The tensions related to trade between both regions escalated early this week when the United States government told that it may impose tariffs worth $11 billion of several goods in retaliation for subsidies given to Airbus by EU that it considers illegal. Last year the WTO had issued a ruling that the allowances given to Airbus had adversely affected US aviation sector and both regions were fighting a long battle of litigation over aviation giants Airbus and Boeing owned by them.
After news of tariff possibility broke out the shares of France based Airbus fell by 2.3 percent and a company spokesman stated that US does not have a legal basis to impose any sanctions as the European Union had always complied with rulings of WTO and it also criticized the possibility of tariffs. A spokesperson for EU stated that they are sure that notice of US about countermeasures are very exaggerated as retaliation of amount authorized by WTO can only be enforced by arbitrator appointed by WTO. The Trade Representative Office of United States declared early this week that it will impose new tariffs on goods imported from EU like fish, dairy products, aircraft, olive oil and binoculars. Mr. Robert Lighthizer stated that its case against EU has been under litigation for nearly fourteen years son now is the time for action. Both the US and the EU have been guilty in the past of paying several billion dollars in subsidies to make their aircraft manufacturing business competitive. Spokesman for EU stated that they will also retaliate in same measure as retaliation rights or EU are also close and it will therefore request arbitrator appointed by WTO to determine its own rights of retaliation.