US offers to settle trade dispute with EU if Airbus repays aid: report

U.S. officials reportedly said they will settle an argument over aircraft subsidies with the European Union in exchange for repayment of billions in aid by Airbus.

U.S. Trade Representative Robert Lighthizer made the offer shortly before the World Trade Organization (WTO) released a report authorizing the EU to levy counter-tariffs on U.S. goods, Reuters reported, citing several people familiar with the matter.

The EU is poised to ask for the WTO’s endorsement of $4 billion in tariffs on American products at an Oct. 26 meeting, Reuters reported.

“That is the first time we have received U.S. feedback on some substantive aspects of our proposal. We have now provided our reaction and we are prepared to continue these discussions,” a spokesperson for the European Commission said, confirming it had received the United States’ first response to the EU offer.

The WTO previously ruled that European loans to Airbus were improperly subsidized, citing the low interest rates involved, and that American plane manufacturer Boeing itself was unfairly subsidized by tax breaks. Both European and U.S. officials have said they have since brought the flaws into alignment with WTO regulations.

The American proposal would alter interest rates on loans to Airbus, assuming a lower level of the company’s development projects would be successful, two sources told Reuters.

The deal would assume a higher-than-usual risk that could cost Airbus billions, which may prove a hard sell after the coronavirus pandemic devastated the aviation industry. A European source told Reuters the proposal was “insulting,” while an American source said Lighthizer remains “serious” about pressuring the European aviation company to repay the aid.

“[Lighthizer] has been very public on the basic principle that … some form of restitution is an important part of any resolution,” Jamieson Greer, a partner with law firm King & Spaulding who previously served as chief of staff to Lighthizer, told Reuters.