Biden and the EU END 17-year trade dispute over Boeing and Airbus tariffs

The United States and the European Union reached a deal Tuesday to end a damaging dispute over subsidies to rival plane makers Boeing and Airbus and phase out billions of dollars in punitive tariffs, the U.S. trade envoy said.

Biden called it a ‘major breakthrough’ in a White House statement released before he wrapped up his visit to Brussels, noting that the dispute between the two airline manufacturers had lasted 16 years.  

‘Both the U.S. and EU agreed to suspend our tariffs for five years, and we committed to ensuring a level playing field for our companies and our workers,’ Biden said.

‘Significantly, we also agreed to work together to challenge and counter China’s non-market practices in this sector that give China’s companies an unfair advantage. He said the US and EU would work jointly ‘on inward and outbound investment and technology transfer. It’s a model we can build on for other challenges posed by China’s economic model.’

After years of transatlantic squabling, Biden also tied it to his case that demoracies ‘are stronger when we work together to advance our shared values like fair competition and transparency.’  

U.S. Trade Representative Katherine Tai said the two sides have come to terms on a five-year agreement to suspend the tariffs at the center of the dispute. She said they could be reimplemented if the U.S. companies are not able to ‘compete fairly’ with those in Europe.

‘Today´s announcement resolves a long-standing irritant in the U.S.-EU relationship,’ Tai said, as President Joe Biden met with EU leaders in Brussels. ‘Instead of fighting with one of our closest allies, we are finally coming together against a common threat.’

The dispute saw tit-for-tat duties slapped on a range of companies that have nothing to do with aircraft production, from French winemakers to German cookie bakers in Europe and U.S. spirits producers in the United States, among many others.

The United States and the European Union reached a deal Tuesday to end a damaging dispute over subsidies to rival plane makers Boeing and Airbus; above President Joe Biden  is welcomed by President of the European Commission Ursula von der Leyen ahead to the EU-US summit

The United States and the European Union reached a deal Tuesday to end a damaging dispute over subsidies to rival plane makers Boeing and Airbus; above President Joe Biden  is welcomed by President of the European Commission Ursula von der Leyen ahead to the EU-US summit

The United States and the European Union reached a deal Tuesday to end a damaging dispute over subsidies to rival plane makers Boeing and Airbus; above President Joe Biden  is welcomed by President of the European Commission Ursula von der Leyen ahead to the EU-US summit

A line of Boeing 777X jets are parked nose to tail on an unused runway at Paine Field, near Boeing's massive production facility in Everett, Wash

A line of Boeing 777X jets are parked nose to tail on an unused runway at Paine Field, near Boeing's massive production facility in Everett, Wash

A line of Boeing 777X jets are parked nose to tail on an unused runway at Paine Field, near Boeing’s massive production facility in Everett, Wash

‘I´m very positive and convinced that together we will deliver today,’ European Commission President Ursula von der Leyen told reporters Tuesday, hours before a meeting in Brussels with President Joe Biden.

The U.S. imposed $7.5 billion in tariffs on European exports in 2019 after the World Trade Organization ruled that the EU had not complied with its rulings on subsidies for Airbus, which is based in France. The EU retaliated last November with $4 billion in punitive duties after the WTO ruled that the U.S. had provided illegal subsidies to Boeing.

In March, weeks after Biden had taken office, the two sides agreed to suspend the tariffs.

The 17 year trade dispute was the longest and most costly in the history of the World Trade Organization 

According to a White House fact sheet:

— SUSPEND TARIFFS: The two sides agreed to suspend the tariffs for five years, signaling ‘a mutual determination to embark on a fresh start in the relationship. The agreement also retains flexibility for the United States to reapply tariffs if we’re no longer competing on a level playing field.’

— CREATE WORKING GROUP: A new working group ‘will collaborate on and continue discussing and developing these principles and appropriate actions,’ with trade ministers consulting yearly. 

— LEVEL PLAYING FIELD: The two sides ‘agreed to clear statements on acceptable support for large civil aircraft producers that affirm the outcomes of the disputes and the intention of the parties to ensure that our workers and industries can compete on a level playing field.’

To confront Chinese ambitions, the two sides would engage in ‘meaningful cooperation’ in ‘countering (1) investments in the EU and the United States by non-market actors, which can lead to the appropriation of technology; and (2) outward investments into China that are influenced by non-market forces.’ They will identify where joint work is needed and share information in the sector. 

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