EU trade official wants swift engagement with Biden on aircraft, digital taxes, WTO

(Reuters) – The European Union is looking to engage quickly with the Biden administration to resolve major trade irritants, including disputes over digital taxes and commercial aircraft subsides, EU Director General for Trade Sabine Weyand said on Friday.

Weyand told an online forum that the EU is planning to present a World Trade Organization reform proposal in February and is now willing to consider reforms to restrain the judicial authority of the WTO’s dispute settlement body.

The United States has for years complained that WTO Appellate Body makes unjustified new trade rules in its decisions and has blocked the appointment of new judges to stop this, rendering the body inoperable.

The Trump administration, which leaves office next Wednesday, had threatened to impose tariffs on French cosmetics, handbags and other goods in retaliation for France’s digital services tax that it said discriminated against U.S. tech firms.

Washington said last week it would put those tariffs on hold as the U.S. Trade Representative’s (USTR) office looked into similar digital taxes planned by Austria, Britain, Italy, Spain, Turkey and India.

Weyand told the event hosted by the Center for Strategic and International Studies in Washington that she saw the decision to not collect tariffs on French goods as a positive sign.

“We are working on an EU proposal and we have timed it so that it coincides with the OECD process and I think there is a possibility to discuss it,” Weyand said.

The OECD has been overseeing an effort by countries to come up with a global solution to digital taxation, but the talks bogged down last year.

Any solution would be non-discriminatory and in full-compliance with WTO rules, Weyand added.

“What we had said to the previous administration was that if you have concerns about WTO compatibility, then to take it to the WTO. What we cannot accept is that the U.S. takes the law into its own hands.”

Weyand said the EU was surprised by USTR’s Dec. 31 move to boost tariffs on French and German aircraft parts and wines in the Boeing-Airbus subsidy dispute, but the bloc had decided to hold off on retaliation for now.

She said the EU’s ambition is to reach a negotiated settlement within six months to the WTO subsidy dispute that began in 2004.

“We’ve been holding our fire because we said, ‘okay it’s three weeks to the new administration.’ So let’s engage rapidly in this, but our objective here is to come to a situation where both sides hopefully would agree to suspend the tariffs,” and create space for negotiations.

Reporting by David Lawder; Editing by Andrew Heavens


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