Truce agreed in 17-year aircraft subsidy battle between U.S. and EU
Daniel Harries
President of the EU Commission Ursula von der Leyen and U.S. President Joe Biden arrive for a summit between the two powers. /AFP/Kenzo Tribouillard

President of the EU Commission Ursula von der Leyen and U.S. President Joe Biden arrive for a summit between the two powers. /AFP/Kenzo Tribouillard

The U.S. and the European Union have agreed a truce in their near 17-year conflict over aircraft subsidies, ending one set of Trump-era tariffs that had soured relations between the two powers.

The two sides have been battling since 2004 in parallel cases at the World Trade Organization (WTO) over subsidies for U.S. planemaker Boeing and European rival Airbus.

They agreed in March to a four-month suspension of tariffs on $11.5 billion worth of goods from EU wine to U.S. tobacco and spirits, which they had imposed in response to the row. On Tuesday, an agreement was made to remove them for five years while still working on an overall deal on what subsidies to allow.



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European Commission President Ursula von der Leyen said in a statement that the bloc's summit with U.S. President Joe Biden had begun with a breakthrough.

U.S. Trade Representative Katherine Tai spelled out Washington's thoughts on the deal, including allowing it to focus on the threat posed by China's nascent commercial aircraft industry.

Tai said the two sides had agreed to clear statements on what support could be given to large civil aircraft producers and would cooperate to counter investments in aircraft by "non-market actors," referring specifically to China.

"We have committed to meaningful cooperation," she said.

Former EU member the UK, which was also involved in the dispute as a home to Airbus production, said it hoped for a similar deal within days. Tai is due to meet her British counterpart Liz Truss on Wednesday.


Steel dispute remains 

The EU-U.S. agreement removes one of two major trade hurdles left over from Donald Trump's presidency, the other being tariffs imposed on grounds of national security on EU steel and aluminium imports.

The European Commission, which oversees EU trade policy, last month suspended for up to six months a threatened June 1 doubling of retaliatory tariffs on Harley-Davidson motorbikes, U.S. whiskey and motorboats, and refrained from slapping tariffs on more American products from lipstick to sports shoes.

Brussels and Washington have said they would seek to address excess global steel capacity, which they blame on China.

The U.S. may find it tougher to remove the metals tariffs, which apply to other countries as well as China, because they are still backed by many U.S. metal producers and workers.

Brussels is also pushing what is calls a new "positive agenda" on trade with Washington, including forging an alliance to drive WTO reform.

The two powers are also likely to agree to cooperate on trade and technology, such as for setting compatible standards and facilitating trade in artificial intelligence.

Source(s): Reuters

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