EU and US end 17-year Boeing-Airbus row, hit pause on 'harmful tariffs'

·3 min read
BRUSSELS, BELGIUM - JUNE 15: U.S. President, Joe Biden (R) meets European Council President Charles Michel (not seen) and President of the European Commission, Ursula von der Leyen (L) for the EU -USA Summit in Brussels, Belgium on June 15, 2021. (Photo by Dursun Aydemir/Anadolu Agency via Getty Images)
European Commission president Ursula von der Leyen (L) said: “We have taken a major step in resolving the longest trade dispute in the history of the WTO.”

The EU and US have announced they are ending a 17-year dispute over aircraft subsidies that involved Boeing (BA) and Airbus (AIR.PA) in a deal that will see the suspension of “harmful tariffs” worth $11.5bn (£8bn).

“Both sides will now seek to overcome long-standing differences in order to avoid future litigation and preserve a level playing field between our aircraft manufacturers and will also work to prevent new differences from arising,” they said.

The tariffs “that hurt companies and people on both sides of the Atlantic” will be suspended for five years in a deal that US President Joe Biden described as being "a major breakthrough".

Airbus shares ticked up 0.4% in Paris on Tuesday afternoon, while Boeing's stock was up 0.7% as markets opened in the US.

European Commission president Ursula von der Leyen said: “We have taken a major step in resolving the longest trade dispute in the history of the WTO.”

“This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit.”

The deal comes as both parties look to curb China's rising economic influence: "We also agreed to work together to challenge and counter China’s non-market practices in this sector that give China’s companies an unfair advantage," said Biden.

Under the deal, both parties said they will not provide research and development funding or specific support like tax breaks to their own producers in a way that would harm the other side.

Read more: UK agrees first post-Brexit trade deal with Australia

And they will collaborate "on addressing non-market practices of third parties that may harm their respective large civil aircraft industries."

The dispute began in 2004, when the US filed a case at the WTO against the EU arguing that the bloc was illegally subsidising Airbus. The EU then filed a complaint against the US in May 2005, for its support to Boeing.

Both then imposed tariffs on each other's exports as a result of which EU and US businesses have had to pay over $3.3bn in duties.

US tariffs affected 19 different product categories, including aircraft, wines and spirits as well as dairy, while EU countermeasures hit 130 different products, including aircraft, nuts, tobacco, spirits, handbags and tractors.

Together, the two cases represent the world’s largest ever corporate trade dispute.

At the end of 2020, Britain said it would suspend tariffs on Boeing jets and other US goods in a move that had surprised Airbus,

Earlier this year, Biden's administration said it will maintain punitive tariffs on some European imports as part the row, with the president stating "it is unnecessary at this time to revise" the levies.

But he had also said he wanted to restore good ties with traditional allies, including the countries of the European Union, after they came under strain with former president Donald Trump's 'America First' approach to trade and foreign policy.

Watch: US and EU end 17-year aerospace subsidy dispute

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