EU's famous olives, cheeses make US tariff list

The United States is taking aim again at the European Union's subsidies on large civil aircraft, proposing increased tariffs on some products the Continent is famous for, such as parmesan cheese, olives and pasta from Italy, and Irish and Scotch whisky.

On Monday, the Office of the US Trade Representative, in a news release, issued for public comment a supplemental list of products "that could potentially be subject to additional duties in order to enforce US rights in the World Trade Organization (WTO) dispute against the European Union (EU) and certain EU member States regarding EU subsidies on large civil aircraft".

The supplemental list, which applies to the 28 member states of the EU, adds 89 tariff subheadings with an approximate trade value of $4 billion to an initial list published on April 12, which had an estimated trade value of $21 billion.

The USTR said it was adding to the list in response to public comment, when more than 40 people testified at public hearings May 15-16. A hearing on the new list is scheduled for Aug 5.

The US and the EU have threatened to impose billions of dollars in reciprocal tariffs in a 14-year dispute at the WTO over aircraft subsidies given to US aircraft maker Boeing and its European rival Airbus.

Monday's move followed news during the Paris Air Show that the US could be open to negotiations on an "enforceable mechanism" that could allow Airbus to receive government funding on commercial terms, potentially leading to a resolution to the aircraft subsidy fight.

Such a deal also would include moves by the US to address tax incentives provided by the state of Washington and make them compliant with trade rulings, as part of a possible new framework for aircraft industry funding, two US sources told Reuters.

The WTO is expected to rule on the US sanctions request by September.

So that antipasto appetizer platter also could be made more costly. Edam, gouda and gruyere cheeses are on the list, too. European countries produce about three quarters of the world's olive oil, which featured prominently on the April list.

The North American Olive Oil Association is petitioning the USTR to remove olive oil from the list.

"It would be tantamount to a tax on the health of American consumers, who are the ones who will be most adversely impacted by tariffs on European olive oils," the group said in April.

"The USTR should recognize the importance of olive oil consumption to Americans' health, and the fact that there is no realistic alternative source of supply," the association said.

It wasn't all delicacies, though. Ten copper-based products showed up Monday on the USTR "annex" list.

"Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft," US Trade Representative Robert Lighthizer said in April. "When the EU ends these harmful subsidies, the additional US duties imposed in response can be lifted."

The USTR said in April that "after many years of seeking unsuccessfully to convince the EU and four of its member states (France, Germany, Spain, and the United Kingdom) to cease their subsidization of Airbus", it brought a WTO challenge to EU subsidies in 2004.

The USTR said that in 2011, the WTO found that the EU provided Airbus $18 billion in subsidized financing from 1968 to 2006.

The WTO determined that European "launch aid" subsidies helped Airbus launch every model of its large civil aircraft, "causing Boeing to lose sales of more than 300 aircraft and market share throughout the world".

Boeing also has been grappling with the fallout from two deadly plane crashes, in October and in March, which have led to the global grounding of its MAX aircraft.

The rekindled dispute with the EU follows positive news out of the G20 in Osaka, Japan, over the weekend, when US President Donald Trump, after meeting Saturday with Chinese President Xi Jinping, said he would postpone tariffs on $300 billion more of Chinese imports and relax some restrictions on telecom giant Huawei Technologies Co Ltd. The two nations also agreed to resume trade talks. Stocks markets rallied in response on Monday.

Trump also told reporters at the White House on Monday that he would not impose threatened tariffs on imports from Mexico because the US' southern neighbor has helped stem the flow of Central American migrants streaming through its country, bound for the US.

Trump said Mexico is doing a "great job" and its actions have had "a very big impact" on migration.

Reuters contributed to this story.