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Europe minister Helen McEntee was in Washington last week seeking relief for Irish exporters from a 25% tariff imposed last October by the USA on liqueurs and cordials, butter and cheddar cheese exports valued at about €360m per annum.
To this list whiskey may now be added since the World Trade Organisation’s appeal panel made a further finding in favour of the USA on 2 December in a long-running dispute about subsidies to aircraft manufacturers.
You could be hearing a lot more about this trade dispute
Under WTO rules, if illegal subsidies are paid which damage the importing country, they can retaliate through tariffs on exports from the offending trade partner, in this case all EU countries.
You could be hearing a lot more about this trade dispute. The United States has been subsidising Boeing, the EU has complained and there could be retaliatory tariffs in the opposite direction when another WTO ruling emerges a few months hence.
The European Union has just one major manufacturer of civilian aircraft, Airbus, which is based in Toulouse but uses inputs from all over the continent. There is substantial employment in France but also in the UK, Germany and Spain. Airbus receives soft loan support approved by the EU and some subsidies to its research and development costs from the EU budget and from the member governments in the beneficiary countries.
The row between the USA and the EU over aircraft subsidies has been going on for decades
In the USA, Boeing is a big defence contractor and subsidies have been paid through various indirect channels, both from the federal government and from the states where Boeing has plants.
The row between the USA and the EU over aircraft subsidies has been going on for decades and the two companies involved, Boeing and Airbus, dominate the world market for passenger jets so the stakes are big.
With a protectionist president in the White House, the US takes a more belligerent attitude and there is now an open tariff war between the US and Europe, alongside the even greater spat between the US and China.
End subsidies
The best way to resolve the aircraft subsidy row would be to bring the subsidies to an end. There are subsidies enough to the airline industry, largely exempt from indirect taxes like VAT and fuel excise and it makes no sense, except to politicians, to be using taxpayer money for further aid to civil aviation.
Neither side is willing to obey the WTO findings and end the party. This destructive tit-for-tat tariff war is the result.
Aviation is seen, rightly, as part of the problem when it comes to climate action and has led a charmed life. The Green movement should be demanding an end to the subsidisation of Airbus.
Ireland has been afforded yet another opportunity to take one for the team
Ireland does not have an aircraft industry and should be a spectator in all of this, but Irish producers are collateral damage, including farmers who supply Irish Distillers and other drinks companies as well as Kerrygold.
Ireland has been afforded yet another opportunity to take one for the team. In 2010 and 2011, during the eurozone financial crisis, the Irish Government was forced to pay billions to unsecured and unguaranteed bondholders in Anglo and other bust banks to whom it did not owe any money, against the advice of the IMF.
This damaging imposition was the project of Jean Claude Trichet, then president of the European Central Bank, who wished to reassure bondholders of French and other European banks with these undeserved payoffs, at Ireland’s expense.
Membership of the European Union confers substantial benefits on member states, but it also creates arbitrary hazards, especially for small countries
Trichet was appointed, on his retirement from the ECB, to the board of (you guessed it) Airbus and surely deserves his very own footnote whenever the history of Ireland’s modern-day relations with France comes to be written.
Membership of the European Union confers substantial benefits on member states, but it also creates arbitrary hazards, especially for small countries. The French and German governments, the main protagonists in the Airbus affair, have exposed every other EU member to these retaliatory tariffs from the USA and it is no consolation that the USA has also been engaged in illicit subsidy games.
There is no rush by French companies to dodge tax in Ireland
The French have been prominent in a concerted campaign against Ireland about corporate tax policy even though there is no revenue loss to the French exchequer, since there are virtually no French companies based in Ireland.
Whatever revenue is being foregone, to Ireland’s advantage, is a loss to the US Treasury, since almost all the multinationals located here are American. There is no rush by French companies to dodge tax in Ireland, reflecting the opportunities they must perceive in France.
Mechanism
There is no proper mechanism at EU level to offset the damage done to small member states by the WTO infringements of their larger colleagues. In this instance the smaller members should seek compliance with the WTO ruling and an end to the illegal Airbus subsidies. Does France ever have to take one for the team?
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