US, EU agree to suspend Airbus-Boeing trade fight


BRUSSELS — United States and European Union agree to stay trade dispute over government subsidies to Boeing Co. and Airbus SE,

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dramatically ease trade tensions as part of a broader effort to improve transatlantic relations.

The deal would suspend tariffs authorized by the World Trade Organization for five years, US Trade Representative Katherine Tai told reporters on Tuesday. Tariffs were temporarily suspended in March.

“We resolved these disputes because we put away our litigation cases,” Tai said. The US and the EU are now focused on ‘what will be best for the competition between us in the context of a world where our industries and our workers will face competition like we have never seen before. She said.

Fingers crossed President Biden answered questions about the deal in Brussels on Tuesday.


Photo:

kenzo tribouillard / Agence France-Presse / Getty Images

The 17-year trade struggle is the longest and most costly in the history of the WTO. U.S. importers have paid more than $ 1.1 billion in tariffs since duties in the dispute took effect in 2019, according to data from U.S. Customs and Border Protection.

Setting aside transatlantic differences over the air dispute allows the allies to jointly focus on China. “Instead of fighting with one of our closest allies, we are finally coming together against a common threat,” Ms. Tai said.

China is continuing heavily subsidized efforts to develop large airliners. The country struggles to catch up with Boeing and Airbus, but the two companies fear that Chinese-made airliners pose a significant trade threat to their significant sales in the world’s most populous country and others in orbit Beijing Economic. China currently accounts for a quarter of their aircraft deliveries.

The separate tariffs the United States imposed on imported steel and aluminum under former President Donald Trump remain in place and will likely take longer to reverse, officials said.

The progress on air fares follows a recent preliminary agreement between members of the Group of Seven Biggest Wealthy Countries to revise international tax rules.

The deal includes details of how the EU and the US will work together to promote a level playing field globally for competition, which would likely include accepting large-scale subsidies provided by China. for their aeronautical sector.

Ms Tai said Tuesday’s deal would allow the two sides to start addressing these challenges after Brussels and Washington “fought hard” for the past two decades over Boeing and Airbus.

“We have been too busy fighting to pay attention,” she said.

EU Trade Commissioner Valdis Dombrovskis said the agreement details agreements for information sharing, coordination and exploration of common approaches for outward and inward investment in the sector.

Mr Dombrovskis acknowledged that both sides still have a lot of work to do to achieve a concerted approach to ensure that neither the US nor the EU unfairly helps their own aircraft manufacturers.

He said that over the next few months a working group will jointly define what kind of support can be provided and how.

The deal comes at a crucial time for both aircraft manufacturers, grappling with the slowdown in air travel caused by the pandemic that has left many customers reluctant or unable to take new jets.

Boeing is also deciding whether or not to launch a new airliner, with much of the long-standing dispute relating to government loans, contracts and other support for clean leaf planes.

Airbus and Boeing spokespersons said their companies welcomed the deal.

Airbus said this would “provide the basis for creating a level playing field that we have been advocating from the start of this dispute.”

Boeing said it “would fully support the efforts of the US government to ensure that the principles of this agreement are respected.”

The United States and the EU agreed in March to a four-month suspension of tariffs on planes and a range of other products, including wine and whiskey, with the aim of reaching a deal and d ‘improve strained bilateral relations. Ms Tai said as part of Tuesday’s deal, the United States maintains the ability to re-impose air fares if the EU violates the terms of the deal.

The now suspended tariffs were imposed following two cases at the World Trade Organization. The suspension reflects the easing of trade tensions between Washington and its trading partners following aggressive trade policies by Mr. Trump, who said global trading partners have long benefited from the United States.

The Airbus-Boeing dispute began in 2004 when the United States filed a complaint with the WTO, claiming that EU subsidies to Airbus put Boeing at a disadvantage. Under the Trump administration, the dispute turned into a tariff fight that trapped food and drink industries unrelated to aircraft manufacturing. Washington imposed tariffs on $ 7.5 billion worth of European food and wine at the end of 2019.

The EU retaliated with levies on US whiskey, nuts and tobacco worth around $ 4.5 billion. The United States stepped up sanctions on Dec. 31 with additional tariffs, putting virtually all wine imports from France and Germany below their 25% tariff.

As the coronavirus pandemic shakes the aviation industry, two industry giants are fighting to protect their legacy. Jaden Urbi of the WSJ explains what Boeing and Airbus are doing to survive this unprecedented crisis – and how it could reshape the future of aviation. Composite photo: George Downs (originally posted May 11, 2021)

The tariffs had weighed on industries that were also grappling with a business collapse during the pandemic, which hailed the deal to remove tariffs.

“The lifting of this tariff burden will support the recovery of restaurants, bars and small craft distilleries across this country that were forced to shut down their businesses during the pandemic,” said Chris Swonger, president of the Distilled Spirits Council of the US

In the aviation industry, airliner deliveries are well below pre-pandemic levels as cash-strapped airlines postpone or cancel orders. However, some customers said pricing – and who pays them – remains a constraint on the number of deliveries.

Delta Airlines Inc.

The expansion of its Airbus fleet has made it one of the US carriers most affected by the EU action, while the planned delivery schedule of Ryanair Holdings PLC’s Boeing 737 MAX has made it the European airline the most exposed this year. Ryanair is still awaiting its first MAX due to quality issues that have forced Boeing to suspend deliveries.

The carriers did not disclose whether or the manufacturer had already paid the tariffs.

Write to Daniel Michaels at [email protected], Andrew Restuccia at [email protected] and Doug Cameron at [email protected]

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