US sanctions over Airbus possible as Malmström-Lighthizer meeting fails to bring breakthrough

US sanctions against the EU over illegal subsidies to Airbus are still on the cards, after meeting between EU trade chief Cecilia Malmström and her US counterpart Robert Lighthizer failed to produce a breakthrough, MLex has learned.

The US is expected to impose steep tariffs on an array of EU imports worth up to $8 billion ― a move that might further escalate global trade tensions and cause serious damage to EU exporters.

Although held in a friendly atmosphere, the meeting between Malmström and Lighthizer in New York failed to generate concrete results.

“Tariffs are still the default scenario,” an official close to the talks told MLex.

Brussels has been pressing the US to let go of its plan to impose tariffs and instead engage in settlement talks.

At meeting on 25 September, Malmström resubmitted a proposal on subsidy arrangements for new market entrants, and said the bloc was ready to discuss how both sides can put an end to remaining issues of noncompliance with the WTO rulings on Airbus and Boeing.

But Lighthizer refused to engage, MLex understands.

The potential use by the US of the “carousel” retaliation mechanism — meaning Washington could change the list of goods subject to duties every six months, to increase the uncertainty and cause the most pain to EU exporters — was not discussed at the meeting.

Malmström’s last-ditch attempt to persuade the US to refrain from sanctions came ahead of an informal EU trade ministers' meeting on Oct. 1 in Brussels. The informal discussion over lunch is intended to provide an opportunity for EU governments to indicate their preferred response to the US sanctions.