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EU weighing all options in U.S. plane dispute, trade chief says

EU weighing all options in U.S. plane dispute, trade chief says
FILE PHOTO: European Trade Commissioner Cecilia Malmstrom attends an interview with Reuters in Geneva, Switzerland June 14, 2019. REUTERS/Denis Balibouse -
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By Philip Blenkinsop

BRUSSELS (Reuters) – The European Union is considering all possible responses to tariffs the United States may impose this month in a two-way dispute over aircraft subsidies, the EU trade chief said on Tuesday.

The World Trade Organization (WTO) has found that both European planemaker Airbus <AIR.PA> and its U.S. rival Boeing <BA.N> received billions of dollars of illegal subsidies in a pair of cases that have run for 15 years.

The Geneva-based body is expected in the coming days to announce the level of trade sanctions the United States can impose over Airbus. A similar ruling for the EU in the Boeing case is expected early in 2020, giving Washington a head start.

“We are exploring all kinds of areas where we could react, but until and if the American tariffs kick in we are prioritising a negotiated solution,” EU Trade Commissioner Cecilia Malmstrom told a news conference. “The EU will not do something that is not compliant with the WTO.”

The EU cannot retaliate immediately to any U.S. tariffs in the case, as it did following what it considered unlawful U.S. tariffs on metal imports in 2018.

The clearest response is to wait until a pronouncement in the parallel Boeing case. However, the EU might seek to revive an existing right to hit $4 billion of U.S. imports in a WTO dispute over U.S. tax breaks for exports, even though the two sides settled in 2006.

Malmstrom declined to comment specifically on that possibility.

“We’re looking to all options and there are some cases where the (WTO) appellate body has judged, as late as this spring, that the U.S. is still not complying with old cases,” she said, in an apparent reference to a WTO finding on Boeing subsidies.

“We’re looking at everything. It doesn’t mean that we will use these possibilities, but everything is on the table,” she told reporters after a meeting of EU trade ministers in Brussels.

People familiar with the case say the WTO’s three-person tribunal is expected to award the United States the right to target $7.5 billion of EU imports, a record for the 24-year-old watchdog.

Washington has drawn up a list of $25 billion from which it will pick targets from aircraft and aerospace parts to wine, cheese and luxury goods. The EU has its own list of $20 billion of U.S. products it could target in the Boeing case.

(Reporting by Philip Blenkinsop, editing by Larry King)

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