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Aviation Strategy for Europe

Boeing subsidy case: World Trade Organization confirms EU right to retaliate against $4 billion of US imports

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The World Trade Organization (WTO) has allowed the EU to raise tariffs up to $4 billion worth of imports from the US as a countermeasure for illegal subsides to the American aircraft maker, Boeing. The decision builds upon the WTO's earlier findings recognizing the US subsidies to Boeing as illegal under the WTO law.

An Economy that Works for People Executive Vice President and Trade Commissioner Valdis Dombrovskis (pictured) said: “This long-awaited decision allows the European Union to impose tariffs on American products entering Europe. I would much prefer not to do so - additional duties are not in the economic interest of either side, particularly as we strive to recover from the COVID-19 recession. I have been engaging with my American counterpart, Ambassador Lighthizer, and it is my hope that the US will now drop the tariffs imposed on EU exports last year. This would generate positive momentum both economically and politically, and help us to find common ground in other key areas. The EU will continue to vigorously pursue this outcome. If it does not happen, we will be forced to exercise our rights and impose similar tariffs. While we are fully prepared for this possibility, we will do so reluctantly.”

In October last year, following a similar WTO decision in a parallel case on Airbus subsidies, the US imposed retaliatory duties that affect EU exports worth $7.5bn. These duties are still in place today, despite the decisive steps taken by France and Spain in July this year to follow suit Germany and the UK in ensuring that they fully comply with an earlier WTO decision on subsidies to Airbus.

Under the current economic circumstances, it is in the mutual interest of the EU and the US to discontinue damaging tariffs that unnecessarily burden our industrial and agricultural sectors.

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The EU has made specific proposals to reach a negotiated outcome to the long running transatlantic civil aircraft disputes, the longest in the history of the WTO. It remains open to work with the US to agree a fair and balanced settlement, as well as on future disciplines for subsidies in the civil aircraft sector.

While engaging with the US, the European Commission is also taking appropriate steps and involving EU member states so that it can use its retaliation rights in case there is no prospect of bringing the dispute to a mutually beneficial solution. This contingency planning includes finalizing the list of products that would become subject to EU additional tariffs.

Background

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In March 2019, the Appellate Body, the highest WTO instance, confirmed that the U.S. had not taken appropriate action to comply with WTO rules on subsidies, despite the previous rulings. Instead, it continued its illegal support of its aircraft manufacturer Boeing to the detriment of Airbus, the European aerospace industry and its many workers. In its ruling, the Appellate Body:

  • Confirmed the Washington State tax programme continues to be a central part of the S. unlawful subsidization of Boeing;
  • found that a number of ongoing instruments, including certain NASA and U.S. Department of Defence procurement contracts constitute subsidies that may cause economic harm to Airbus, and;
  • confirmed that Boeing continues to benefit from an illegal U.S. tax concession that supports exports (the Foreign Sales Corporation and Extraterritorial Income Exclusion).

The decision confirming the EU right to retaliate stems directly from that previous decision.

In a parallel case on Airbus, the WTO allowed the United States in October 2019 to take countermeasures against European exports worth up to $7.5bn. This award was based on an Appellate Body decision of 2018 that had found that the EU and its Member States had not fully complied with the previous WTO rulings with regard to Repayable Launch Investment for the A350 and A380 programmes. The US imposed these additional tariffs on 18 October 2019. The EU member states concerned have taken in the meantime all necessary steps to ensure full compliance.

More information

WTO Appellate Body ruling on US subsidies to Boeing

Public consultation on preliminary list of products in the Boeing case

Preliminary list of products

History of Boeing case

History of Airbus case

 

Aviation Strategy for Europe

Single European Sky: Lowering emissions and reducing delays

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MEPs want to modernize the EU's airspace management to make it more efficient and greener, Society.

Updating Single European Sky rules should help the aviation sector become more efficient, ensuring shorter flights through more direct routes and thus lowering greenhouse gas emissions, say MEPs.

The Single European Sky initiative was launched in 1999, in a period marked by a large increase in flights and growing delays that highlighted the need for better coordination.

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MEPs want the rules to be reformed to make EU airspace less fragmented and improve air traffic management. This would  increase safety and efficiency, lower costs and benefit the environment.

Currently, airlines may not fly directly to the landing point. They may want to avoid flying over states with higher charges, avoid military zones or take a longer route to avoid the weather. That can mean longer flights and more emissions. Fragmentation can also cause delays due to less-than-optimal coordination.

MEPs say airspace management rules need to be further developed and adapted to evolving markets, the new digital environment and the European Green Deal. They are pushing for new rules that would help achieve up to a 10% reduction in greenhouse gas emissions, by avoiding longer routes and promoting cleaner technologies.

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They also want to make European airspace more competitive and support choosing air-traffic service providers and other air navigation services such as communication and meteorological services through competitive tenders.

Background

Current Single European Sky rules date from 2009. The European Commission proposed a revision in 2013 that was adopted by Parliament in 2014. Following the failure of the Council to reachan  agreement, the Commission proposed an upgrade in line with the European Green Deal in 2020.

On 17 June 2021, Parliament's transport and tourism committee updated their negotiating mandate on the Single European Sky reform and adopted their position on expanding the mandate of the European Union Aviation Safety Agency to act as a performance review body. After the latter position was announced during the July plenary session, MEPs are ready for negotiations with the Council.

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Aviation Strategy for Europe

Commission calls for simple solutions for consumers seeking compensation for cancelled flights

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The European Commission and consumer authorities are calling on airlines to improve their handling of flight cancellations. The Commission and national consumer authorities have called on airlines to improve how they deal with cancellations in the context of the COVID-19 pandemic. 

Airlines operating in the EU are urged to improve their practices with the help of a list of measures drawn up jointly by the Commission and the consumer protection group, CPC network. The initiative is in response to the huge number of consumer complaints received by those trying to exercise their air passenger rights and is based on the results of a survey launched earlier this year to collect data on the handling of complaints by 16 major airlines. The analysis of the answers provided highlighted a range of issues, including some airlines presenting the right to reimbursement in money less prominently than other options such as re-routing or vouchers, and implying that reimbursement is an act of good will, rather than a legal obligation.

Justice Commissioner Didier Reynders said: “We have received a lot of complaints from consumers but we have also worked closely with airlines to understand where there are shortfalls and why. Airlines need to respect the rights of consumers when flights are cancelled. Today we are asking for simple solutions to give consumers certainty after a period of extreme turmoil.” 

The EU Transport Commissioner Adina Vălean, said: “We are currently assessing regulatory options to reinforce passenger protections. We will continue to work with national authorities to have passengers' rights properly communicated, implemented and enforced. Passengers must have a real choice between vouchers and refunds.

"Most airlines surveyed also did not refund passengers within the seven-day time limit provided for by EU law. They must take action to ensure that this delay is respected for all new bookings – whether bought directly or through an intermediary – and to swiftly absorb the backlog of pending reimbursements, by 1 September 2021 at the latest."

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The European consumer organisation (BEUC) said: "It has been almost a year and a half since COVID19 started and many airlines are still in breach of consumer law."

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Aviation Strategy for Europe

Aviation sector welcomes updated EASA-ECDC Aviation Health Safety Protocol

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Leading aviation associationswelcomed the European Union Aviation Safety Agency (EASA) and European Centre for Disease Prevention and Control (ECDC)’s latest COVID-19 Aviation Health Safety Protocol, which acknowledges the positive epidemiological developments across Europe and low risk of virus transmission during air travel as part of updated measures to keep travel safe and smooth for passengers this summer. For the first time ever, the Protocol supports the use of Rapid Antigen Tests, particularly for passengers travelling from high-risk areas - and also calls for harmonisation of the measures across Europe.

This follows last week’s adoption of the latest Council Recommendations supporting the restart of intra-EU and third country travel, making use of the EU’s Digital COVID Certificate (DCC) system. Member states must now implement the DCC system by 1 July. EU countries have connected their national certificate systems to the EU gateway ahead of the deadline.

The updated Protocol echoes the Council Recommendation from 10 June 2021, proposing: “People who are fully vaccinated against COVID-19 or who recovered from the disease in the last 180 days should not be subject to testing or quarantine, unless they are coming from an area of very high risk or where a Variant of Concern is circulating. For travel from such destinations, the requirement for a negative test could be considered. This could be either a Rapid Antigen Detection Test (RADT) taken no more than 48 hours before arrival or a PCR test no more than 72 hours before arrival.”

In a joint statement, the six associations said: “Protection of public health, including that of our staff and our passengers, continues to be aviation’s number one priority throughout this pandemic. Following successful vaccination programmes across Europe and an improved epidemiological outlook, these updated guidelines are very timely and will help to ensure a smooth and safe passenger journey. We are counting on EU Member States to now play their part and update the existing measures accordingly, so that passengers know what toexpect. This is crucially important for restoring passenger confidence and to help our sector’s recovery.”

The associations further welcome the following updates to the Protocol:

  • Flexibility regarding the requirement for continued physical distancing at airports, given that only fully vaccinated, recovered or tested passengers will be travelling. This will help ease operational challenges posed by the previous physical distancing measures. Both airports and aircraft continue to be extremely safe environments.
  • From a health safety perspective, verification of the DCC is best organised outside prior to departure.
  • Testing, where required, should be carried out before a flight rather than upon arrival or during transit;
  • Document checks should be limited to one single check prior to travel. Repeated checks, e.g. also upon arrival, serve very little medical purpose and could lead to unnecessary queuing.

Europe now has all the tools: the DCC, a digital Passenger Locator Form (dPLF) and Council Recommendations on international and intra-EU travel to ensure a safe and smooth reopening of air travel this summer. As vaccination rates increase and the epidemiological situation further improves, the six associations expect the last preventative measures to be further scaled back or removed as appropriate, in line with a reduction in the overall risk level.

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