Why did the EU threaten to retaliate over Airbus-related tariffs even after they were allowed by the WTO?

Question

I'm probably missing something in the long saga of the Airbus-Boeing WTO complaints, but today the BBC reported that:

The US has been given the go-ahead to impose tariffs on $7.5bn (£6.1bn) of goods it imports from the EU.

It is the latest chapter in a 15-year battle between the US and the EU over illegal subsidies for planemakers Airbus and rival Boeing.

The ruling by the World Trade Organization (WTO) could mean tariffs on EU goods ranging from aircraft parts to cheese and salmon fillets.

Brussels has threatened to retaliate similarly against US products.

The US first filed the case against Airbus in 2004, arguing that cheap European loans for Airbus amounted to illegal state subsidies.

The WTO decided in favour of the US, which subsequently complained that the EU and certain member countries were not in compliance with the decision, prompting years of further wrangling.

While the US had wanted to impose tariffs on $11bn worth of EU imports in retaliation for the aid to Airbus, the WTO cut that figure to $7.5bn - still the largest penalty of its kind in WTO history.

The WTO's dispute settlement body must formally adopt the ruling but is not expected to overturn the decision.

Since the EU usually abides by WTO decisions, how come they are still threatening to retaliate over those WTO-blessed tariffs? Or maybe I'm misreading the timeline here and they only threatened to retaliate if the US raised tariffs before this final WTO decision?

Actually the story then says

"But if the US decides to impose WTO authorised countermeasures, it will be pushing the EU into a situation where we will have no other option than do the same," the European Commission said.

This suggest that in the Boeing WTO decision, the WTO allowed the EU to impose its own retaliatory tariffs. Is that the gist of the story here? Is the EU hoping to "cancel out" WTO-authorised retaliatory tariffs on both sides?

Answer 1

It's right there in the article you've linked, but it is reading between the lines a bit.

The EU are not threatening retaliatory tariffs in a tit-for-tat manner. They are talking about how the EU will respond following the Boeing ruling which is expected next year.

Meanwhile, the two sides are waiting for the WTO to decide on what tariffs the EU can impose against the US in retaliation for US state aid given to Boeing. That ruling is expected next year.

Bruno Le Maire, France's finance minister, said the country was "ready to respond firmly with our European partners".

"A friendly resolution to the Boeing/Airbus dispute is the best solution, and all the more so given that Europe could impose sanctions on the US next year," he said.

"Resorting to tariffs is not in the interests of the UK, EU or US," the UK said. "We are working closely with the US, EU and European partners to support a negotiated settlement to the Airbus and Boeing disputes".

The Airbus/Boeing thing is a long running dispute, where both sides have been ensuring that their aircraft manufacturer is not swamped under by the other. The EU statements suggest they would rather resolve this without resorting to sanctions, and presumably getting some agreement about not using the WTO hammer the next time saving these manufacturers becomes a strategic necessity.

15 Year Timeline of the Dispute. And EU Press Release from 2004 explaining the source of contention various EU State Aid in the form of launch investment VS US State Aid in the form of R&D payments.

Original Bilateral agreement for supporting these manufacturers

Answer 2

What Jontia says is correct. Here's a better explainer from Reuters (of yesterday):

Who won?

By many accounts, the lawyers and multiple expert witnesses. Costs of the cases are estimated to top $100 million.

In the cases themselves, both sides have won partial WTO rulings but nobody can agree which side came out on top. Each has said its own subsidies were smaller or less harmful than those abroad. Both say they have removed any harmful aid, but the WTO says neither has complied fully.

Now WTO arbitrators must decide on mutual claims of billions of dollars of harm inflicted on each side by “actionable subsidies” in order to determine the amount of tariffs allowed, starting with U.S. sanctions on EU goods.

How big are the tariffs?

The United States seeks tariffs on EU goods with an annual trade value of $11.2 billion. The EU seeks tariffs on U.S. goods worth around $10 billion. People close to the case say the WTO is set to allow Washington to impose around $7.5 billion in tariffs. The EU will find out how much it can impose next year.

So yeah, the EU was hoping the US would hold off on those Airbus-related tariffs since it hopes to be awarded an almost equal amount in the Boeing judgement. Reuters also says

Can the EU retaliate?

Under WTO rules, the EU cannot retaliate directly but it is expected to win permission to impose its own tariffs when its parallel case catches up in 2020. There has been some EU talk of reviving a $4 billion war chest of tariffs from an earlier case, to be used at once, but this is sure to provoke a new debate.

There's clearer confirmation today that US is moving ahead with specific tariffs stemming from the Airbus case they won. Reuters again:

The United States will impose 10% tariffs on aircraft and 25% on other industrial and agricultural products from the European Union as part of a World Trade Organization penalty award in a long-running aircraft subsidy case, an official with the U.S. Trade Representative’s office said on Wednesday. [...] The tariffs are expected to take effect on Oct. 15, the official said.

A later piece of Reuters news today set the date to Oct 18 (matching what the BBC says in that respect).