EU Council President Charles Michel, President of the European Commission, Ursula von der Leyen and US President Joe Biden will meet on June 15, 2021 for the EU-US Summit in Brussels, Belgium.
Dursun Aydemir | Anadolu Agency | Getty Images
The US and the European Union announced Tuesday that they had settled a 17-year dispute over aircraft subsidies and agreed to suspend tariffs for five years due to the Boeing-Airbus dispute.
“This meeting started with a breakthrough in aircraft,” said European Commission President Ursula von der Leyen, who met President Joe Biden at a US-EU summit in Brussels. “This really opens a new chapter in our relationship as we move from litigation to collaborations on aircraft – after 17 years of fighting.”
At a subsequent press conference, von der Leyen added: The agreement that has now been reached really opens a new chapter in our relationship because we are moving from litigation to cooperation. “
US Sales Representative Katherine Tai said during a video call Tuesday, “Today’s announcement solves a long-standing trade problem in US-Europe relations.”
“Instead of fighting with one of our closest allies, we are finally coming together against a common threat,” she added, referring to China.
In a joint statement with the EU, she added that both sides “now have the time and space to find a lasting solution through our new working group on aircraft and at the same time save billions of euros in tariffs for importers on both sides of the Atlantic”.
CNBC reported last week that the EU is pushing the White House to reach an agreement to end trade tariffs imposed during the Trump administration in connection with the 2004 Airbus-Boeing dispute.
As part of the agreement, the EU and the US have agreed to provide research and development funding through an open and transparent process and not to provide targeted support to their own producers, for example through tax breaks that would harm the other side.
The idea is also to work together to combat non-market practices from other countries, including China, which is developing its own civil aircraft.
Tai said tariffs on EU products would be suspended as long as government support to Airbus meets the terms of the agreement.
“Should EU support cross a red line and US producers unable to compete fairly and on an equal footing, the United States will retain the flexibility to reactivate the suspended tariffs,” she said.
Airbus and Boeing celebrate the deal
Tuesday’s big announcement marked Biden’s first trip to EU headquarters and the first EU-US summit since 2014.
Airbus and Boeing, which dominate the commercial aircraft market, hailed the deal that is just coming as manufacturers begin to regain a foothold from the Covid-19 pandemic.
“Anything that balances out the competitive conditions in this highly competitive industry and avoids this terrible loose-ticket offer of tariffs across the Atlantic or other borders is good,” said Christian Scherer, Airbus Chief Commercial Officer on Tuesday in a media talk . “You don’t have to take that from Airbus … just ask our customers.”
Customers of Airbus aircraft manufactured in Europe include Delta Air Lines, but Airbus has expanded its manufacturing presence in the United States with its facility in Mobile, Ala., Where it manufactures narrow-body aircraft.
“The deal reached today commits the EU to jump-start and leaves the necessary rules in place to ensure that the EU and the United States honor that commitment without the need for further WTO action,” Boeing said in an explanation. “Boeing will fully support the US government’s efforts to ensure that the principles of this agreement are respected.”
Boeing was considering developing a new jetliner, which was undone by two crashes of its bestseller 737 Max in 2018 and 2019. Meanwhile, Scherer said Tuesday that Airbus had “wind in the sails” to develop a freighter version of its A350 aircraft that would compete against Boeing cargo planes.
“This shows the new spirit of cooperation between the EU and the US and that we can solve the other problems for our mutual benefit. Together we can do something good for our citizens and businesses,” said Valdis Dombrovskis, EU chief commercial officer Statement Tuesday.
WTO decisions
Relations between the EU and the US hit rock bottom during the previous White House administration when then-President Donald Trump accused the EU of being worse than China in its trade practices.
Trump imposed tariffs of $ 7.5 billion on European products after the World Trade Organization ruled that the EU had given Airbus unfair subsidies.
Shortly thereafter, following another WTO ruling, the EU imposed tariffs of US $ 4 billion on US products, according to which the US had granted Boeing illegal aid.
Boeing shares rose 0.3% in morning trading, while Paris-listed Airbus shares traded 0.4% higher.
Separately, the UK said on Tuesday it was hoping for a similar deal with the United States in the coming days.
The UK was a member of the EU at the time of the dispute and was hit by the trade tensions that developed during the Trump presidency.
The EU and the US agreed in March to suspend tariffs for four months, a step towards resolving the longstanding trade war.
Steel and aluminum tariffs
The European Union also wanted to reach an agreement on metal tariffs during Biden’s visit, but von der Leyen said the priority was on aircraft subsidies.
In 2018, the Trump presidency decided to impose a 25% tariff on European steel and a 10% tariff on European aluminum for national security reasons – something the EU vehemently opposed and opposed. In response, a first round of tariffs worth 2.8 billion euros (3.4 billion US dollars) was introduced by the EU and another round worth 3.6 billion euros was due to start this month.
However, the EU decided last month to suspend these metal-related tariffs as a show of goodwill in order to kick-start negotiations.
Von der Leyen said on Tuesday that she was “confident that we will find a solution on this matter”.
