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Airbus To Pay Higher Interest Rates On Subsidy Loans To End Tariff Row With US

Airbus To Pay Higher Interest Rates On Subsidy Loans To End Tariff Row With US
In a "final" bid to turnover tariffs imposed by the United States and to convince the US to come to a settlement for the 16-year-old dispute over aircraft subsidies of over billions of dollars, the European plane maker will amend French and Spanish government loans, the company said on Friday.
A higher rate of interest will be paid by it for the two loans that had been grantee to as aid in the development of the A350 jet, which was pressed into service in 2015, Airbus said.
This measure of Airbus to pay a higher rate of interest on the loans should settle the spat with the United States at the World Trade Organization, the European Union and France said, but if that does not happen, Europe will impose sanctions on the US, the EU said.
"In the absence of a settlement, the EU will be ready to fully avail itself of its own sanction rights," Trade Commissioner Phil Hogan said.
The issue of the loans is a part of the system that the US is fighting against in a battle that has been ongoing at the WTO for years now. In the dispute Europe has also accused the US of subsidizing its airplane maker and Airbus rival Boeing.
Last year, the WTO approved imposition of US sanctions on European goods of a value of up to $7.5 billion for goods ranging from wine to whisky, because the case was unable to withdraw Airbus subsidies completely.
In return however it is also expected that the EU will also win WTO approval to impose retaliatory tariffs on US goods over subsidies for Boeing and trade groups fear that it would ;lad to an escalation of the row in the autumn.
Charges of doling out illegal support to their respective plane makers have been upheld against both the US and the EU by the WTO. Amid multiple appeals, the main issue that was debated and fought at the WTO was whether each party obeyed those rulings. This has been ongoing for the last eight years.
"With this final move, Airbus considers itself in complete compliance with all WTO rulings," Airbus said.
Following the abolition by the US government of aerospace industry tax breaks that largely benefited Boeing, the US declared in May that it has fully complied with the WTO findings and rulings.
According to reports, the statement issued by airbus on Friday could lead to negotiations for the settlement of the dispute even though Airbus is not officially a party to the case – in which case the tussle has primarily been between the United States and the EU as well as its members countries of Britain, France, Germany and Spain.
Negotiations have been called for on the issue repeatedly by both sides even though both have also accused the other of not being responsive to such invitations for talks.
It has been reported that those European industry that have been hit the US tariffs, including Scotch whisky makers and Spanish farmers, have been putting pressure on Airbus and European governments which has led to this decision.

Christopher J. Mitchell

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