Airbus Boeing deal still leaves other US-EU rifts unresolved

The deal the United States and the European Union reached on June 15 to end their long-running dispute over subsidies to Boeing and Airbus will mean the phase-out of billions in punitive tariffs. It will ease trans-Atlantic tensions. And it will allow the two sides to focus on a common economic threat: China.

But the breakthrough leaves other trade frictions between the U.S. and the EU unresolved. Most prominently, the import taxes that President Donald Trump imposed on European steel and aluminum three years ago have been left in place by President Joe Biden. Whether progress on that vexing issue can be resolved soon remains unclear.

But on the Boeing-Airbus dispute, 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 conflict. Tai cautioned, though, that the tariffs could be re-imposed if U.S. companies aren’t 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 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 deal brings a fresh dose of international goodwill for Biden as he heads into a potentially thorny summit on June 16 with Russian President Vladimir Putin. It’s also good news for an airlines sector that has been ravaged by coronavirus travel restrictions.

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.

In March, weeks after Biden had taken office, the two sides agreed to suspend the tariffs. That suspension started on March 11 for four months. The new agreement will officially go into effect on July 11.

“This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft — after 17 years of dispute,” said European Commission President Ursula von der Leyen. “It is the longest trade dispute in the history of the WTO.”