
US set to impose tariffs on $7.5B of EU exports in Airbus row - dustinmoris
https://www.bbc.co.uk/news/business-49906815
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ineedasername
Boeing has received approximately $90 billion in subsidies since 2000, from
local, state and federal sources in the form of taxes, grants, and loan
guarantees. [0]

[0] subsidytracker.goodjobsfirst.org/parent/boeing

~~~
defertoreptar
The question is not if there are subsidies, but whether they are legal
subsidies.

> “The WTO has now rejected every allegation of unlawful subsidies to Boeing
> with the single exception of one measure—a Washington State business and
> occupancy (B&O) tax rate. Boeing has pledged from the beginning of this case
> to comply with the WTO’s rulings, and the B&O tax rate will be no exception.
> Boeing will support the United States and Washington State as they take
> steps necessary to fully comply with today’s ruling.

> In 2006, after attempts to negotiate a bilateral agreement, the U.S.
> Government (USG) filed a case with the World Trade Organization claiming
> Airbus had received $22 billion in illegal subsidies. U.S. officials
> estimated the economic benefit of those subsidies (in 2006 dollars) at more
> than $200 billion.

[http://www.boeing.com/company/key-orgs/government-
operations...](http://www.boeing.com/company/key-orgs/government-
operations/wto.page)

~~~
ineedasername
Citing Boeing on this isn't really going to get a good answer, _of course_
they think it's an illegal subsidy. You need to define illegal though.

The general interpretation of the issue states that allowable subsidies are,
_" those which are applied to research and pre-competitive development
activities, and others which assist disadvantaged regions_" [0]

Tens of billions of dollars in tax breaks and loan guarantees doesn't really
seem like it could all fit under that definition, and indeed it looks likely
that the WTO will rule that way as well.

The main problem with this case isn't just that AirBus received illegal
subsidies. That can be true at the same time that Boeing _also_ received them,
making this a somewhat ridiculous thing to argue about, for Boeing to claim to
be the aggrieved party here when any grievance or disadvantage has been offset
by their own subsidies.

The end result will be additional tariffs imposed in both directions, making
consumers pay more, at a time that tariffs and trade wars exacerbate a minor
economic slowdown, increasing the chance that it will turn into something
more.

[0]
[https://www.thefreelibrary.com/Trade+Liberalization+Under+th...](https://www.thefreelibrary.com/Trade+Liberalization+Under+the+GATT%2C+the+NAFTA+and+the+EU%3A+Selected+...-a078738322)

~~~
defertoreptar
Boeing isn't just saying that they "think" there are illegal subsidies.
They're pointing to the WTO's rulings. I guess I could've looked up those
particular cases and cited them directly. However, I reckon if they were lying
about what the WTO was saying, that wouldn't be difficult for you to find and
point to yourself. In fact, we need look no further than the article that
started this discussion to verify. Let's look at the actual content of the
argument instead of relying on circumstantial ad hominem.

~~~
ineedasername
No, you're right: The WTO has ruled against AirBus, which makes their
subsidies de facto officially illegal. But Boeing isn't a great source for
understanding the intricacies of the issue, and by definition any claim that
subsidies are improper is also a claim that they are illegal. That's pretty
much what I meant, along with pointing out that Boeing's subsidies are
similarly problematic.

~~~
Beldin
Note: The WTO will issue their ruling on the legality of Boeing's subsidies in
January.

------
Xixi
It seems that the EU could retaliate immediately, due to an old WTO win [1].
Though probably for a smaller amount, somewhere between $2.2bn and $5.0bn. And
then of course there is the pending WTO final decision against Boeing/US
expected I believe next year [2].

I don't think this will be a win for anyone...

[1] [https://leehamnews.com/2019/09/30/eu-can-retaliate-
against-b...](https://leehamnews.com/2019/09/30/eu-can-retaliate-against-
boeing-immediately-old-wto-win-outstanding/)

[2] [https://www.dw.com/en/wto-rules-against-us-and-boeing-in-
mam...](https://www.dw.com/en/wto-rules-against-us-and-boeing-in-mammoth-
trade-row-with-eu/a-48105904)

~~~
ceejayoz
> I don't think this will be a win for anyone...

Nobody wins in trade wars.

~~~
aivisol
Not that I support trade wars, but do we have evidence that really nobody wins
in trade wars? Just out of curiosity.

~~~
api_or_ipa
As another poster mentioned, when countries don't trade, they lose their
comparative advantage in producing the products that they can produce most
efficiently. With free trade, countries can focus on building the products
that they're most efficient at producing. Now, it's important to bring that
with free trade, the distribution of benefits is not equal. Those who produce
a product that is now competitive in the global market stand to gain. Those
who produce products that now face cheaper foreign competition stand to lose.
It can be shown that the gains are always larger than the losses, but there
may not be an effective mechanism to re-distribute the benefits and losses so
that everyone wins. This is known as Kaldor-Hicks efficiency.

~~~
tracker1
First, I'm an advocate for fair trade, since truly free/open trade doesn't
exist and in some cases could be very bad. For example, the US doesn't allow
for slave labor (prison labor being a near exception). There are limits on
forced work cycles and requirements for safety.

I would suggest that we allow open trade with those countries that meet or
exceed our own work, safety and environmental protection requirements. In this
case, China, India, most of Africa and some of South America does not meet
such levels. In which case, trade should appropriately be restricted unless
and until such changes are implemented. This doesn't force our values on other
countries, but would at the very least encourage better work and environmental
conditions.

In the process of deferring our own production overseas, we've lost our own
ability to produce a lot of goods. Some of which requires material resources
that are excessively scarce domestically while not fostering relationships
with other countries that do have more of those natural resources. This has
allowed China and others to foster those relationships, and the conditions
relaxed to the point of the acquiring of those resources creating, IMHO, more
damages than the good those resources bring.

I do feel that environmental pollution is a real and serious problem, though
I'm less inclined to support the paranoid delusions of some, and the outright
disinformation of those that are pushing a political agenda over any real,
meaningful environmental impact. There are real and meaningful changes that
should happen, and negotiation with foreign governments and peoples are a part
of that.

As to balancing the winners and losers, I am not sure that should be a goal of
trade, and even then that's a large part of what tariff and excise taxes
are/were for. It will always balance out in the end and technology is ever
increasingly the great equalizer.

------
zarro
The short term "necessities" for tariffs aside, I don't see why in the long
run we shouldn't be working toward eliminating all tariffs to begin with.

The argument: -The US consumer buys $100B in Japanese products. -Japan
consumers buys $50B in US products.

US cries: We spent $50B more on your products, you MUST buy ours or we will
raise tariffs.

How is that fair? I provide you with a product you wanted, and now instead of
being allowed the same courtesy I have to chose between accepting a product
back I don't want, or being hurt on my ability to reach my customer base?

It just seems like a mechanism for less productive producers to cheat by using
the government to show arbitrary favoritism instead of actually working on
improving their product(s) to service ALL their customers better.

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mrtksn
Aren’t the production lines of Airbus and Boing booked for many years ahead?
Isn’t this why airlines put up with the 737-MAX fiasco?

Then, aren’t these tariffs simply a tax on the consumers?

~~~
salex89
True... But with the 737 saga continuing, and there is no Boeing successor in
sight, and you ain't gonna buy any Airbus soon, I personally believe there are
influences in some airlines to actually think about switching. It isn't going
to be easy but you've got a lot of time on our hands anyway. This taxes might
make just that bit more difficult.

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Tepix
Could increased tariffs be a win for the environment? More locally sourced
goods means less wasteful transports...

~~~
NTDF9
As much as it seems so, it's not environmentally efficient.

This is because the same raw materials would have to be extracted at multiple
places, more people would have to work at similar factories, producing similar
goods.

Effectively, the world will be making the same 7 billion shoes except that
shoe manufacturing infrastructure+supply chains+transportations will have to
be made everywhere, thus expediting environmental degradation.

A lot of extra work will be done to find the same efficiencies everywhere.

Shipping for 7 billion people is actually very efficient.

------
v4dok
Tarifs on airbus the moment Boeing is doing that bad with the 737 fiasco seem
more than "happy news" to the Boeing's shareholders. I call that effective
lobbying.

What is astonishing however is how Trump is so willingly trading the
relatively stable economic environment with EU for another trade war front.

------
resters
Queue the HN cheerleaders for tariffs. Not sure why everyone seems to think
politicians meddling in the economy is a good thing (subsidies or tariffs).

~~~
Zarath
As opposed to not meddling? Has that ever happened in the history of
government? Economics and politics are tightly coupled.

