By George Landrith, Frontiers of Freedom
European businesses who are paying the economic price for the European Union’s illegal subsidies to Airbus are now siding with the US and its attempt to resolve the EU’s illegal launch aid to Airbus. Because of more than a decade of flagrant and illegal subsidies the EU has provided to Airbus, the World Trade Organization (WTO) authorized the US to impose tariffs on European products in the same amount as the damage that was done to the US by the EU’s illegal subsidies. The European industries now being hit by those tariffs are starting to side with the US and demand that the EU stop its illegal subsidies to Airbus.
In 2010, the WTO ruled that the EU had been providing billions of illegal subsidies for years to Airbus resulting in harm to the US aerospace industry and millions of Americans who work in the industry. Six years later, the WTO ruled that the EU had not only failed to stop its illegal activity, but had essentially doubled down on their illegal subsidies to Airbus — in the form of launch aid. With the EU making it clear that they will simply thumb their noses at international trade law, the US was left with only one option — and option that the WTO endorsed — tariffs on European goods to recover the costs of the damages done to the US and its citizens.
The EU continues to avoid working towards a solution on the illegal launch aid to Airbus. And as a result, the tariffs continue. But the costs of those tariffs are not born entirely by Airbus. Other European sectors, for example, agricultural products like food and beverages, are hit with tariffs and now those industries are hit with the economic challenges of COVID-19 on top of the tariffs. So these European businesses have begun to demand that their government, the European Union, stop dragging its feet and get serious about ceasing the illegal launch aid to Airbus.
The problem is that the illegal launch aid is actually part of Airbus’s business model. They have admitted that without it, they could not produce new products. I’m not sure why they feel they need the illegal aid. Everyday businesses all across the globe invest in their future and produce new products that they believe consumers will want to buy. None of those businesses get government provided cash for that process. But for some reason, Airbus lacks confidence in its ability to do that — unless the taxpayers of Europe provide them with illegal launch aid.
It is revealing that the EU continues to drag its feet for more than a decade and refuses to stop its illegal behavior. Even as their own European businesses demand that the illegal launch aid to Airbus stop, the EU seems unfazed. Why is the EU refusing to get right with international law? Why is the EU so willing to sacrifice its other industries to financial hardship and ruin (especially during the economic crisis created by COVID-19) so that they can continue to prop-up Airbus?
One thing is clear — American policy has been unwavering. No matter who is in the White House or which party controls Congress — we will not tolerate other nations violating international law and thereby harming US jobs. So it seems unlikely that the EU is waiting to see who is in control in Washington in 2021. What seems likely is that the EU is simply making it clear that it will continue to flout international trade law, the WTO, and American efforts to resolve this illegality. Moreover, the EU is making it clear that it will happily harm its own agriculture industry so that it can continue providing illegal launch aid to Airbus.
American policy makers — whether it be the White House, Congress, or the US Trade Representative — must remain committed to holding the EU and Airbus accountable for their brazen lawlessness. The good news is that now even European business interests are siding with the United States. So now is the wrong time to lose resolve or to give the EU slack. That would only embolden their lawlessness. America must stand united to promote true and honest free trade. It isn’t free trade to expect ordinary businesses to compete with governments and their ability to tax. With even Europeans siding with America, no American policy maker should waiver or agree to concessions. We must demand compliance with international law — nothing less will do.
George Landrith is the President of Frontiers of Freedom, a public policy think tank devoted to promoting a strong national defense, free markets, individual liberty, and constitutionally limited government.