WASHINGTON (Pakistan Point News / Sputnik - 04th October, 2019) The World Trade Organization's approval of US tariffs against EU products as retaliation for the bloc's illegal subsidies to Airbus will likely result in tit-for-tat action that ultimately benefits no one, former Australian government trade negotiator, Joshua Meltzer, told Sputnik.
Under Wednesday's WTO decision the United States can impose tariffs on $7.5 billion worth of EU goods. Washington has requested 10 percent tariffs on civil aircraft and 25 percent tariffs on a number of food imports including French, Spanish, German and UK still wines and single malt Scotch whiskey.
"I think there's going to be some retaliation on various agricultural products," Meltzer, currently a senior fellow at the Brookings Institution, said on Thursday. "The dairy producers in the US will benefit... and the pork producers."
But Meltzer also pointed to the likelihood of European manufacturers getting a chance to retaliate against US entities with their own tariffs when the world trade body rules against illegal subsidies for Boeing in the United States as the next part of its action.
"So, in the end, there may not be a real benefit for any side," Meltzer said.
US President Donald Trump's administration, he added, is likely targeting the agricultural sector because it seems quite politically important and protected.
"US agricultural tariffs have not been as effective now, and sort of done poorly under Trump. So I think he probably wants to do what he can to help US farmers," the former trade official said.
What also makes these tariffs different is that they are EU-endorsed, he added, unlike the unilateral ones that Trump has pursued with China and other countries.
"They're actually legal tariffs," Meltzer said. "You now have a chance to put legal tariffs on EU products."
In a tweet, the US president himself hailed the WTO ruling, which came after a 15-year battle waged by Washington, as a "nice victory".
But the former Australian trade official doubted that it will be as much a victory for the United States as Trump proclaimed.
"I don't think this EU ruling is going to have any major impact on the overall US economy. I think $7.5 billion is just not big enough," Meltzer said. "Some specific sectors will clearly be targeted and that's the whole point of tariffs. In the end, I think the consumers will end up paying a bit more in the US for this thing."
Airbus and United States' Boeing, the world's two largest planemakers, have waged a battle over subsidies at the WTO since 2004.
The WTO will be ruling on Europe's complaint about Boeing in eight months. The bloc has already asked for a similar amount of "countermeasures" in response to US support for Boeing.
"In reality, tariffs are not necessarily a benefit for us. I don't know how this is going to play out in terms of the broader trade relationship," Meltzer said.
US Secretary of State Mike Pompeo in an interview with Italy's Sky TG24 news channel on Wednesday said the Trump administration might target Italian wine and cheese makers under the tariffs.
Scotch whiskey, Italian cheese and French wine makers who were unexpectedly dragged into the Airbus-Boeing rivalry reacted with surprise and anger on Thursday. Whiskey and wine producers who spoke to Sputnik warned that such tariffs would have far-reaching consequences for the spirits industry.
Karen Betts, chief executive of the Scotch Whiskey Association (SWA), described the potential tariffs against the spirits industry as a "heavy blow." The US market accounts for 22 percent of global value and 10.7 percent of global volumes for the SWA. Single Malt Scotch Whiskey itself represents over half of the total value of UK products on the US tariff list.
