EU, US reach deal to end Airbus Boeing trade dispute

The United States and the European Union reached a deal on June 15 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.

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 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 trade dispute skyrocketed under the Trump administration, and 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 U.S. imposed what could have amounted to $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 up to $4 billion in punitive duties after the WTO ruled that the U.S. had provided illegal subsidies to Seattle-based Boeing.

Tai said they would cooperate “to challenge and counter China’s non-market practices in this sector in specific ways that reflect our standards for fair competition.”

Airbus, which is headquartered in France but also has centers in Germany and Spain, welcomed the agreement.

“This will provide the basis to create a level playing field which we have advocated for since the start of this dispute. It will also avoid lose-lose tariffs that are only adding to the many challenges that our industry faces,” an Airbus spokesperson said in a statement.

Despite the breakthrough, the deal does not end the Trump-era trans-Atlantic trade row. The former U.S. president also slapped duties on EU steel and aluminum. That move enraged European countries, most of them NATO allies, because it was justified as a measure to protect U.S. national security.

The so-called Article 232 proceeding both hurts European producers and raises the cost of steel for American companies. The EU retaliated by raising tariffs on products like U.S.-made motorcycles, bourbon, peanut butter and jeans.