US, EU agree truce in 17-year battle for aircraft subsidies

BRUSSELS (Reuters) – The United States and the European Union have agreed to a truce in their nearly 17-year dispute over aircraft subsidies, ending a Trump-era tariff package that had plagued consumers relations between them.

FILE PHOTO: An Airbus A350 airliner flies over Boeing flags as it lands after a flight demonstration during the 51st Paris Air Show at Le Bourget Airport near Paris, June 15, 2015. REUTERS / Pascal Rossignol / File Photo

The two sides have been fighting since 2004 in parallel cases at the World Trade Organization concerning subsidies granted to the American aircraft manufacturer Boeing and its European rival Airbus.

They agreed in March to a four-month suspension of tariffs on $ 11.5 billion of goods ranging from EU wine to US tobacco and spirits, which they had imposed in response to the dispute. On Tuesday, they announced they would cut them for five years, while working on a comprehensive agreement on which subsidies to allow.

European Commission President Ursula von der Leyen said in a statement that an EU-US summit with US President Joe Biden started with a breakthrough.

U.S. Trade Representative Katherine Tai explained Washington’s thoughts on the deal, seen as allowing them to focus on the threat posed by China’s burgeoning commercial aviation industry.

Tai said the two sides had agreed to clear statements on the support that could be given to large producers of civilian aircraft and would cooperate to counter investment in aircraft by “non-market players,” referring specifically to China.

“We are engaged in meaningful cooperation,” she said.

Former EU member Britain, also involved in the dispute as the production headquarters of Airbus, has said it hopes for a similar deal within days. Tai is due to meet his British counterpart Liz Truss on Wednesday.


The EU-US deal removes one of the two main trade irritants left by Donald Trump’s presidency, the other being the tariffs imposed for national security reasons on imports of steel and aluminum from the United States. ‘EU.

The European Commission, which oversees EU trade policy, last month suspended for up to six months a threat to double retaliatory tariffs on June 1 on Harley-Davidson motorcycles, the American whiskey. and powerboats, and refrained from imposing tariffs on more American products, from lipstick to sports. shoes.

Brussels and Washington have said they will seek to address excess global steel capacity largely centered in China.

The United States might find it more difficult to remove tariffs on metals, which also apply to other countries like China, as they are still supported by many American metal producers and workers.

Brussels is also encouraging what is called a new “positive agenda” on trade with Washington, notably by forging an alliance to drive WTO reform.

The two are also likely to agree to cooperate on trade and technology, for example to establish compatible standards and facilitate trade in artificial intelligence.

Reporting by Marine Strauss and Philip Blenkinsop; additional reporting by Will James in London, edited by Louise Heavens and Philippa Fletcher

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