The European Commission starting today (November 10) will impose a 15% tariff on Boeing products. The body issued this statement:

The European Commission’s regulation increasing tariffs on U.S. exports into the EU worth $4 billion will be published in the Official Journal of the EU. The countermeasures have been agreed by EU Member States since the U.S. has not yet provided the basis for a negotiated settlement, which would include an immediate removal of U.S. tariffs on EU exports in the Airbus WTO case. The World Trade Organization (WTO) formally authorized the EU on October 26, 2020 to take such countermeasures against illegal U.S. subsidies to aircraft maker Boeing. The measures will take effect on November 10, 2020. The European Commission stands ready to work with the U.S. to settle this dispute and also to agree on long-term disciplines on aircraft subsidies.

Executive Vice-President for an Economy that Works for People and Commissioner for Trade, Valdis Dombrovskis, said: “We have made clear all along that we want to settle this long-running issue. Regrettably, due to lack of progress with the U.S., we had no other choice but to impose these countermeasures. The EU is consequently exercising its legal rights under the WTO’s recent decision. We call on the U.S. to agree to both sides dropping existing countermeasures with immediate effect, so we can quickly put this behind us. Removing these tariffs is a win-win for both sides, especially with the pandemic wreaking havoc on our economies. We now have an opportunity to reboot our transatlantic cooperation and work together towards our shared goals.”

The countermeasures bring the EU equal footing with the U.S., with sizeable tariffs on each side based on two WTO decisions related to aircraft subsidies. They include additional tariffs of 15% on aircraft as well as additional tariffs of 25% on a range of agricultural and industrial products imported from the U.S., thereby strictly mirroring the countermeasures imposed by the United States in the context of the WTO case on subsidies to Airbus.

Background

In March 2019, the Appellate Body, the highest WTO instance, confirmed that the U.S. had not taken appropriate action to comply with WTO rules on subsidies, despite the previous rulings. Instead, it continued its illegal support of its aircraft manufacturer Boeing to the detriment of Airbus, the European aerospace industry and its many workers. In its ruling, the Appellate Body:

• confirmed the Washington State tax program continues to be a central part of the U.S. unlawful subsidization of Boeing;
• found that a number of ongoing instruments, including certain NASA and U.S. Department of Defence procurement contracts constitute subsidies that may cause economic harm to Airbus;
• confirmed that Boeing continues to benefit from an illegal U.S. tax concession that supports exports (the Foreign Sales Corporation and Extraterritorial Income Exclusion).

This decision confirming the EU right to retaliate stems directly from that previous decision.

In a parallel case on Airbus, the WTO allowed the United States in October 2019 to take countermeasures against European exports worth up to $7.5 billion. This award was based on an Appellate Body decision of 2018 that had found that the EU and its Member States had not fully complied with the previous WTO rulings with regard to Repayable Launch Investment for the A350 and A380 programs. The U.S. imposed these additional tariffs on October 18, 2019. The EU Member States concerned have taken in the meantime all necessary steps to ensure full compliance.

European Commission has made this announcement:

Today (September 22), the European Commission is proposing an upgrade of the Single European Sky regulatory framework which comes on the heels of the European Green Deal. The objective is to modernise the management of European airspace and to establish more sustainable and efficient flightpaths. This can reduce up to 10% of air transport emissions.

The proposal comes as the sharp drop in air traffic caused by the coronavirus pandemic calls for greater resilience of our air traffic management, by making it  easier to adapt traffic capacities to demand.

Commissioner for Transport, Adina Vălean, declared: “Planes are sometimes zig-zagging between different blocks of airspace, increasing delays and fuel consumed. An efficient air traffic management system means more direct routes and less energy used, leading to less emissions and lower costs for our airlines. Today’s proposal to revise the Single European Sky will not only help cut aviation emissions by up to 10% from a better management of flight paths, but also stimulate digital innovation by opening up the market for data services in the sector. With the new proposed rules we help our aviation sector advancing on the dual green  and digital transitions.”

Not adapting air traffic control capacities would result in additional costs, delays and CO2 emissions. In 2019, delays alone cost the EU €6 billion, and led to 11.6 million tonnes (Mt) of excess CO2. Meanwhile, obliging pilots to fly in congested airspace rather than taking a direct flight path entails unnecessary CO2 emissions, and the same is the case when airlines are taking longer routes to avoid charging zones with higher rates.

The European Green Deal, but also new technological developments such as wider use of drones, have put digitalisation and decarbonisation of transport at the very heart of EU aviation policy. However, curbing emissions remains a major challenge for aviation. The Single European Sky therefore paves the way for a European airspace that is used optimally and embraces modern technologies. It ensures collaborative network management that allows airspace users to fly environmentally-optimal routes. And it will allow digital services which do not necessarily require the presence of local infrastructure.

To secure safe and cost-effective air traffic management services, the Commission proposes actions such as:

• strengthening the European network and its management to avoid congestion and suboptimal flight routes;
• promoting a European market for data services needed for a better air traffic management;
• streamlining the economic regulation of air traffic services provided on behalf of Member States to stimulate greater sustainability and resilience;
• boosting better coordination for the definition, development and deployment of innovative solutions.

Next Steps

The current proposal will be submitted to the Council and the Parliament for deliberations, which  the Commission hopes will be concluded without delay.

Subsequently, after final adoption of the proposal, implementing and delegated acts will need to be prepared with experts to address more detailed and technical matters.

Background

The Single European Sky initiative was launched in 2004 to reduce fragmentation of the airspace over Europe, and to improve the performance of air traffic management in terms of safety, capacity, cost-efficiency and the environment. A proposal for a revision of the Single European Sky (SES 2+) was put forward by the Commission in 2013, but negotiations have been stalled in Council since 2015. In 2019, a Wise Person’s Group, composed of 15 experts in the field, was set up to assess the current situation and future needs for air traffic management in the EU, which resulted in several recommendations. The Commission then amended its 2013 text, introducing new measures, and drafted a separate proposal to amend the EASA Basic Regulation.

Airlines For Europe issued this open letter to the European Commission:

25 travel and tourism bodies as well as unions across Europe united today in an unprecedented call for European Commission leadership to replace quarantine restrictions with an EU Testing Protocol for Travel in a bid to save the livelihoods of more than 27 million Europeans who work in the sector.

In an open letter to European Commission President Ursula von der Leyen, the groups – which represent over 5,000 member companies and their workers, point to a continued lack of co-ordination and diverging travel restrictions as crippling their business. The letter is signed by representatives from across the tourism and travel sector and their workers, including airlines, airports, railways, ground handlers, caterers, travel retailers, air navigation service providers, tour operators, hotels, restaurants, cafes, travel agents, road transport operators and logistics services, camp sites, holiday parks, taxi operators, tourism boards and authorities and all their associated supply chains.

“With an estimated 55% fewer flights, an overall revenue loss of some €140 billion across the European aviation industry and a growing number of frustrated travellers, it’s about time that Europe shows some leadership in getting travel restrictions coordinated properly across the continent”, said Thomas Reynaert, Managing Director, Airlines for Europe (A4E).  More than 20,000 A4E airline passengers were denied boarding this summer due to the chaotic, fragmented situation.

The letter comes as the latest data from airport body ACI EUROPE shows a continued decline in passenger traffic at Europe’s airports during the first two weeks of September – now standing at a loss of -73%; down from sluggish ‘peak recovery level’ of -65% mid-August.

“This chaotic situation requires your immediate personal involvement” states the letter to Mrs. von der Leyen. “We are thus urging you to make this issue a top priority and calling on you to address this issue directly with Heads of State and Government”.

“We are therefore also urging you to ensure that the Commission takes the lead in the development of an EU Testing Protocol for travel and its implementation to avoid quarantines and re-open borders”.

The sectors which have united in this call for immediate action point to the fact that the European Centre for Disease Prevention and Control (ECDC) formally advises states against extreme travel restrictions, which are neither risk-based nor proven effective where community transmission is already present – which is the case across Europe.

The letter concludes by highlighting the core pillars and essential purpose of the European goals. The reduction and removal of quarantines is, state the signatories, “instrumental in re-establishing the free movement of people, ending current discriminations and restoring the essential functionality of the Single Market”.