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U.S.,E.U. deal on plane subsidies must include China clause – USTR

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U.S. Trade Representative Robert Lighthizer has said that The United States and Europe should agree to cooperate in opposing any future “hurtful” subsidies used by China to build up its commercial aircraft industry.

China had recently announced its much-hyped challenge to the commercial aviation industry, long dominated by Boeing and Airbus,  by announcing its  C919 single-aisle plane by the state-owned Commercial Aircraft Corporation (COMAC).

Lighthizer further said that he was working to settle a 16-year-old dispute between Washington and Brussels over past government aid to aircraft manufacturers, but expressed frustration that current World Trade Organization rules would not prevent future subsidies by the European Union or china.

“If this plays out, they can start a new subsidy tomorrow, and drag out that litigation for five or six years, and there’s nothing under the WTO that you can do about it at all,” Lighthizer said in an interview on Tuesday.

He said he had made several proposals to settle the matter before the Trump administration leaves office on Jan. 20.

“In every proposal, I’ve made, I’ve said we have to have a clause that says, that whatever we agree to if China starts to do massive subsidies in this area and it’s hurtful, we have to be able to work together to solve that problem,” he said.

The comments address what many trade experts have long regarded as the end game of the 16-year trade dispute – a transatlantic deal that the two sides could use to curb future subsidies by China in its fast-growing aerospace industry.

The WTO has ruled against every past use of government loans to develop new airplanes but has not outlawed future subsidies.

U.S. and European negotiators have been engaged in intensive talks about ending the dispute over government aid to Europe’s Airbus AIR.PA, which is politically backed by Britain, France, Germany, and Spain, and U.S. aid to planemaker Boeing BA.N.

The U.S. side has insisted on repayment of damages, a proposal rejected by EU negotiators, according to sources familiar with the matter.

Reflecting U.S. concerns about the WTO, Washington is also seeking a bilateral dispute settlement mechanism that could be modeled on the system adopted in its U.S.-Mexico-Canada trade agreement, said one of the sources.

Both sides have imposed tariffs against each other’s aircraft and a range of food and liquor products after receiving a green light from the WTO, which found both engaged in illegal subsidies in the past.

The EU in November said it would impose tariffs on $4 billion of U.S. goods, while U.S. tariffs on $7.5 billion of EU products have been in place since 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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