Flags of the EU fly in front of the headquarters of the European Commission in Brussels, Belgium, June 29, 2020. (Xinhua/Zhang Cheng)

The World Trade Organization (WTO) on Tuesday ruled that the European Union (EU) can impose tariffs on US products worth around 4 billion US dollars, in retaliation for government subsidies given to the aircraft manufacturer Boeing.

The WTO said in an arbitration decision that the level of countermeasures, amounting to 3.99 billion dollars, is commensurate with the adverse effects suffered by Boeing's European rival Airbus in terms of lost sales and impeded imports and exports of its aircraft.

In reaction, the US Trade Representative Robert Lighthizer said in a press release that "the EU has no valid basis to retaliate against any US products," noting that the WTO arbitrator "did not authorize any retaliation for subsidies other than the Washington State tax break," which was "repealed earlier this year."

File photo shows an Airbus A330 NEO performing during a flight display at the 53rd International Paris Air Show held at Le Bourget Airport near Paris, France, June 17, 2019. (Xinhua/Gao Jing)

 
"The EU will immediately re-engage with the US in a positive and constructive manner to decide on next steps," tweeted Valdis Dombrovskis, the European Commission's Executive Vice President in charge of trade.

"Our strong preference is for a negotiated settlement. Otherwise, we will be forced to defend our interests & respond in a proportionate way," he added.

Photo taken on July 15, 2020 shows an exterior view of the World Trade Organization (WTO) headquarters in Geneva, Switzerland. (Photo by Li Ye/Xinhua)

 
The long-standing issue between the EU and the US began in 2004, when the US accused France, Spain and Germany -- also known as the "Airbus member states" -- of providing illegal subsidies and grants to support the production of a range of Airbus products.

Following prolonged legal proceedings, the WTO allowed the US to take countermeasures against European exports worth up to 7.5 billion dollars in October 2019. The basis for this was a 2018 decision that found that the EU and the "Airbus member states" had not fully complied with previous WTO rulings with regard to Repayable Launch Investment for the A350 and A380 programs.