Recently, following a long series of hearings and consideration concerning a U.S. complaint that the European Union was unfairly subsidizing Airbus’s production of commercial aircraft, the World Trade Organization ruled in favor of the United States. However, it certainly did not rule in favor of the forgotten man and woman — working taxpayers of all backgrounds who occasionally fly in Airbus planes.
By its favorable ruling, which was in accord with multiple previous decisions, the WTO authorized the Trump administration to jack up the prices that American airlines pay for the popular Airbus liners — and thus what people must pay when they fly. Some might say the WTO decision was a win for Boeing, but hardly anyone should say it is a win for the public.
It’s an unusually complex story.
Just as the WTO was considering the U.S. complaint, the august body was reviewing an EU complaint alleging that the U.S. was unfairly subsidizing its own aviation powerhouse, Boeing, in the production of aircraft sold to EU air carriers. That decision is still pending, but it’s easy to speculate that the precedent will hold. In a few words, the two unions seem to be washing each other’s laundry instead of just doing their own.
It’s as if we’ve had Santa Claus-style governments subsidizing their airlines and operating internationally, making it possible for good girls and boys (and bad ones too) to travel more cheaply (at taxpayers’ expense). Now, the WTO rulings not only have the power to change that but to usher in unnaturally high, tariff-driven prices — and at a time when not many people are flying anyway. If that happens, Santa’s elves might as well go back to making toy planes instead of helping folks make real ones.
But wouldn’t you know — there is more to the story. When the Trump administration received word that tariffs, which the administration loves to place on consumers, had been approved for aircraft, it took another approach. It seems the coronavirus-strained U.S. airlines begged for mercy. Now, instead of raising consumer prices for air travel, the administration indicated it would raise tariffs on EU wine, cheese, and other goods from 25% to 100%. In the case of wine, it’s something that had been threatened for several years.
So, ironically, virus-concerned consumers who until now may have been enjoying an occasional glass of French wine during their confinement might have to cut back. Meanwhile, the nations that make up the EU seem eager to negotiate with the U.S. and find a solution to this mess.
The WTO episode started in better times, long before the nations involved were caught in the coronavirus recession. What may have made sense then, at least to politicians whose constituents somehow love tariffs, makes no sense at all now.
Perhaps, just perhaps, this would be a good time to call for a two-year moratorium on all tariff talks. Let’s give the world’s struggling economies, and the forgotten men and women who form them, a chance to breathe.
Bruce Yandle is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson University College of Business & Behavioral Science. He developed the “Bootleggers and Baptists” political model.