On The Hill

WTO Ruling

On Tuesday (Oct. 13), the World Trade Organization (WTO) ruled the European Union (EU) has the right to impose $3.99 billion worth of tariffs on U.S. goods in retaliation for subsidies to Boeing.

The latest decision set the amount of retaliatory tariffs the EU can impose. Previously, the WTO established that Boeing received illegal subsidies.

The U.S. has imposed tariffs on $7.5 billion worth of EU products that included a 15 percent tariff on Airbus aircraft and a 25 percent tariff on other goods. The European Commission stressed that if a negotiated settlement is not reached, it was ready to impose tariffs.^[1] 

Boeing called the decision “irrelevant,” and said EU tariffs would not be permissible under WTO law.

“We are disappointed that Airbus and the EU continue to seek to impose tariffs on U.S. companies and their workers based on a tax provision that has been fully and verifiably repealed,” Boeing said in a statement.^[2] 

Airbus Chief Executive Officer Guillaume Faury said it is now “time to find a solution” so that tariffs can be removed on both sides.

U.S. Trade Representative (USTR) Robert Lighthizer warned the EU that it should not retaliate against the $3.99 billion worth of U.S. goods. “Any imposition of tariffs based on a measure that has been eliminated is plainly contrary to WTO principles and will force a U.S. response,” Lighthizer said.

According to Reuters, Lighthizer made an offer to settle the dispute if Airbus repays billions of dollars in aid to various European governments. This offer was made prior to the Tuesday (Oct. 13) WTO report.^[3] 

“We are waiting for a response from the EU to a recent U.S. proposal and will intensify our ongoing negotiations with the EU to restore fair competition and a level playing field to this sector,” Lighthizer added.^[4] 

The EU rejected Lighthizer’s offer, and Trade Commissioner Valdis Dombrovskis said he sees “no basis” for U.S. demands that Airbus payback government loans. 

Trump vowed on Thursday (Oct. 15) that he will “strike back harder” if the EU retaliates in the Boeing case.

To view the WTO’s ruling, click here.

 

France Reinstates Digital Tax

On Wednesday (Oct. 14), French Finance Minister Bruno Le Maire said the country will begin collecting taxes on digital companies this year.

The announcement came after the Organization for Economic Cooperation and Development (OECD) pushed back a global digital tax deal until mid-2021. The OECD said it will take more time to reach a political deal on two proposals for a digital tax and minimum corporate rate.

Le Maire said it has “always been clear” that “if there was no agreement at the OECD in the autumn, we would levy our national tax.”

“There has never been any ambiguity on the subject,” he added.

Reintroducing the levy could encourage the Trump administration to retaliate with tariffs on French products.^[5] 

 

2020 Election

Both President Trump and former Vice President Joe Biden are campaigning on trade issues going into the final stretch before the Nov. 3 election. This week, Trump and Biden will campaign in Pennsylvania, Arizona, Iowa, North Carolina, Ohio, and Florida, which are all states that have been heavily impacted by the Trump administration’s trade policies from the past four years.

Trump often discusses his trade agenda, especially towards China, as a part of his speeches at rallies.

“We’ve spent the last four years reversing the damage Biden has inflicted over the last 47 years with that ridiculous, dumb thought NAFTA, TPP, and China’s entry into the World Trade Organization, a disaster for our country,” Trump told supporters at a rally in Sanford, FL.

Biden does not talk about his trade agenda as frequently but has criticized the current administration for its approach to China and “needless” trade provocations.

“We’re going to make trade strategy that fights for every American worker and every American job and actually get results, not Trump’s chaotic trade war, erratic tweets, and bluster that’s only stiffed American workers and consumers, including farmers,” Biden said to supporters in Ohio.

Biden has released various “Buy American” plans that the campaign hopes will help win back blue-collar voters. The COVID-19 pandemic has fueled bipartisan interest in additional mandates to promote domestic production of key medicines and medical supplies. Biden may also use trade agreements to combat global warming.

USTR Lighthizer has recently defended the administration’s trade record, and said Trump has fulfilled his promise to take bold action on Chinese trade practices and has yielded “transformative” trade deals that benefit people across the U.S.

The final presidential debate will be held on Oct. 22 in Nashville, TN.

 

China

TikTok

On Wednesday (Oct. 14), TikTok sued to block some restrictions in the Executive Order (EO) Trump signed this summer. TikTok and its parent company ByteDance asked a federal judge to halt the government-imposed prohibitions.

The restrictions are set to take effect Nov. 12 and would effectively cease TikTok’s operations in the U.S.^[6] 

Phase One

This week, the U.S. Department of Agriculture (USDA) reported China has recently made significant purchases of corn and soybeans.

According to the department’s Foreign Agricultural Service, China bought 420,000 metric tons of corn this week for delivery during the 2020-2021 delivery year, and 264,000 metric tons of soybeans.

Trade officials are optimistic China will live up to the Phase One deal.

To view USDA’s weekly export sales report, click here.

 

Solar Tariffs

This past weekend, Trump released a proclamation that would increase tariffs on imported solar cells and modules and eliminate an exemption for two-sided solar panels.

Trump also directed the USTR to assess whether the duties should be extended. The tariffs are set to expire in 2022.

The proclamation will set tariffs at 18 percent, up from the 2021 fourth-year 15 percent level the original tariff action called for. Removing the exemption for bifacial solar panels could also have significant impacts on developers.^[7] 

Trump said the changes will help “achieve the full remedial effect envisaged” when the tariffs were put in place.

To view the proclamation, click here.

 

References

^[1] Giorgio Leali. “WTO: EU can impose tariffs of almost $4B on U.S. goods in Boeing dispute.” Politico Pro, 13 Oct. 2020. https://link.edgepilot.com/s/0970ca4e/4cGekOltVEOb_PxB2tq6Lg?u=https://subscriber.politicopro.com/article/2020/10/wto-eu-can-impose-tariffs-of-almost-4b-on-us-goods-in-boeing-dispute-3984581

^[2] Leali, Giorgio & Palmer, Doug. “Boeing: WTO decision on EU retaliatory tariffs is ‘irrelevant.’” Politico Pro, 13 Oct. 2020. https://link.edgepilot.com/s/4303f28b/mV-pfdOzVE_j2SMVMKAqwA?u=https://subscriber.politicopro.com/article/2020/10/boeing-wto-decision-on-eu-retaliatory-tariffs-is-irrelevant-3984585

^[3] Hepher, Tim; Shalal, Andrea; and Blenkinsop, Phillip. “U.S. offers truce if Airbus repays billions in aid-sources.” Reuters, 15 Oct. 2020. https://link.edgepilot.com/s/35bf192f/fbmFV_dwp0em5L0AFCRiCA?u=https://www.reuters.com/article/wto-aircraft-idUSKBN2701AP

^[4] Palmer, Doug. “USTR warns EU not to retaliate in Boeing case despite WTO approval.” Politico Pro, 13 Oct. 2020. https://link.edgepilot.com/s/ed6306a0/ZWvViS3TDkqwlhFG7w4gWA?u=https://subscriber.politicopro.com/article/2020/10/ustr-warns-eu-not-to-retaliate-in-boeing-case-despite-wto-approval-2008183

^[5] Smith-Meyer, Bjarke & Braun, Elisa. “France reinstates digital tax, courting trade war.” Politico Pro, 14 Oct. 2020. https://link.edgepilot.com/s/98ae58de/9vQqw2koCUqA4GB6EkejZQ?u=https://subscriber.politicopro.com/article/2020/10/france-reinstates-digital-tax-courting-trade-war-3984613

^[6] Overly, Steven. “TikTok sues to block remainder of Trump’s executive order.” Politico Pro, 14 Oct. 2020. https://link.edgepilot.com/s/d73ec5d6/pR1csPr7BE2nQ95aCgCUYg?u=https://subscriber.politicopro.com/article/2020/10/tiktok-sues-to-block-remainder-of-trumps-executive-order-3984619

^[7] Merchant, Emma Foehringer. “Trump Moves to Increase Solar Import Tariffs, Kill Bifacial Exemption.” GreenTechMedia, 12 Oct. 2020. https://link.edgepilot.com/s/94ad189d/Vgsa4SLOLE2pDrIpekfEeA?u=https://www.greentechmedia.com/articles/read/presidential-proclamation-to-increase-extend-section-201-tariffs