FR 2020-29225

The document titled "Notice of Revision of Section 301 Action: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute" outlines actions taken by the United States Trade Representative (USTR) in an ongoing trade dispute between the U.S. and the European Union (EU) concerning subsidies for large civil aircraft. The USTR has decided to adjust the trade measures by imposing additional duties on certain goods from specific EU member states, prominently France and Germany. This decision mirrors the EU's approach in a similar dispute involving Boeing and Airbus and aims to push for a fair resolution.

General Summary

In this document, the U.S. Trade Representative has opted to change the existing tariff measures to closely resemble actions previously taken by the EU. This shift involves adding specific products from France and Germany to the list of items subject to extra duties, in response to subsidies that are not compliant with World Trade Organization (WTO) rules. These additional duties are set to take effect on January 12, 2021.

Significant Issues and Concerns

One of the crucial issues presented in the document is the methodology used to impose tariffs and calculate trade values. The EU's valuation is contested by the U.S., particularly in how it accounted for the economic downturn resulting from the COVID-19 pandemic. Additionally, the language of the document is highly technical, making it potentially confusing for those not well-versed in international trade law. Terms like "reciprocal goods of the affected industry" might require further explanation for the general public. Moreover, the document references past actions and civil notices without providing comprehensive background information, necessitating extra research for full comprehension.

Broad Public Impact

For the general public, the document highlights a contentious trade relationship between the U.S. and the EU that could lead to increased prices for goods originating from France and Germany as a result of additional tariffs. These extra costs might be passed on to consumers in the form of higher prices for affected goods.

Impact on Specific Stakeholders

For stakeholders, there is a mixture of potential positive and negative impacts:

• Consumers: Individuals who purchase imported goods from France and Germany might experience price increases. The range and nature of affected products could vary, affecting consumer spending.

• Businesses: Companies in the United States that rely on imports of affected goods might face higher costs, potentially impacting their profitability and pricing structures. Conversely, U.S. industries competing with these European products might experience a slight advantage due to reduced competitiveness from higher-priced imports.

• Trade Relations: On a diplomatic level, this action could intensify existing tensions between the U.S. and the EU. The focus on France and Germany might strain these particular bilateral trade relations further.

While the document attempts to address imbalances perceived by the U.S., the overall effects of these changes in tariffs remain complex and multifaceted. The trade measures could continue to evolve as both the U.S. and EU work towards a satisfactory resolution of their long-standing dispute in the aviation sector.

The document addresses adjustments to trade policies and tariffs in response to a dispute over subsidies for large civil aircraft. These actions are not about immediate money spending but involve economic measures intended to influence international trade relations. Although there's no direct spending or appropriation, the monetary values referenced provide context for the significance of these trade measures.

Financial References

1. Level of Countermeasures: The WTO Arbitrator determined that the EU's inconsistent launch aid to its large civil aircraft industry warranted countermeasures approximating $7.5 billion annually. This figure represents the value of economic actions that the U.S. is permitted to apply in the form of tariffs on EU products. This reflects the economic scale of the dispute and sets the ceiling for U.S. trade actions.

2. Proposed Additional Duties: On June 26, 2020, a new list of products from France, Germany, Spain, and the UK was proposed to face additional duties. These products have an estimated import trade value of $3.1 billion, demonstrating the substantial economic impact of potential U.S. tariffs on these nations' exports.

3. EU's Retaliatory Measures: The EU implemented duties affecting an annual trade value of $4 billion in retaliation against U.S. goods. This action by the EU is a financial response to the U.S. tariffs, highlighting the reciprocal nature of trade disputes.

4. Reference Period Concerns: The EU's methodology in applying their $4 billion authorization involved data influenced by the COVID-19 pandemic's economic downturn. This resulted in discrepancies between the EU's and U.S.' trade measures, as the EU covered a larger volume of imports due to altered economic conditions.

5. Revised U.S. Trade Action: Importantly, despite adjustments, the value of the U.S. trade action remains below the WTO-authorized level of $7.5 billion. This ensures compliance with the Arbitrator's findings while maintaining significant economic pressure on the EU.

Relation to Identified Issues

• The document does not entail direct federal budget spending or appropriations. Instead, it involves financial references within the context of international trade law. The financial implications of these trade actions are critical as they influence international relations and negotiations.

• The targeting of specific countries (France and Germany) for additional tariffs involves economic considerations, reflecting their roles in the WTO-inconsistent subsidies. Although economically justified in the trade dispute framework, this may be perceived adversely by the targeted countries.

• The economic impact of COVID-19 is mentioned but not deeply analyzed, leaving some ambiguity about the broader financial effect of these tariff policies. The reference periods used for the trade measures were influenced by pandemic-related economic downturns, potentially skewing the perception of normal trade values and financial impacts.

In conclusion, the financial references in the document underscore the economic dimensions of the U.S.-EU trade actions. While there is no direct fiscal spending, the figures involved highlight the financial scale and implications of the trade measures in an ongoing international dispute.