U.S. and E.U. Agree to Suspend Feud Over Aid for Airbus and Boeing

Belgian capital, BRUSSELS — Airbus and Boeing subsidies have been suspended for five years as a result of President Biden’s announcement on Tuesday, ending a 17-year dispute with the European Union over subsidies for Boeing and Airbus.

As Vice President Biden prepared to meet with European leaders at a U.S.-EU summit meeting, a breakthrough occurred. Two days of negotiations in Brussels between US trade representative Katherine Tai and EU trade commissioner Valdis Dombrovskis finally produced an agreement that member countries approved overnight, according to European officials.

For another five years, both sides have agreed to suspend tariffs and work together to counter China’s investment in the aircraft sector, according to Ms. Tai in a press briefing.

When asked about Airbus subsidies, she said that the agreement set limits on how much the European Union could provide and that the US would impose billions of dollars in tariffs if EU subsidies exceeded a “red line.”

For as long as Europe is supporting Airbus, these tariffs will be suspended, according to her. It is possible to reactivate tariffs if the EU support crosses the “red line” and U.S. producers are unable to compete fairly and on an equal footing. ”

After both sides agreed in March to a suspension of significant punitive tariffs estimated at $11.5 billion on a wide range of products, including wine and tractor parts as well as spirits and molasses, the agreement means that the suspension will continue.

Airbus and Boeing have been at odds for nearly two decades over allegations of illegal state subsidies. To respond to EU subsidies to Airbus in 2019, Washington was given green light by WTO to levies worth up to $7.5 billion in annual trade tariffs.

A year later, in a separate case, it found that Boeing’s U.S. benefits violated trade rules as well, allowing Brussels to impose annual tariffs of around $4 billion on the United States.

As part of Vice President Biden’s “foreign policy for the middle class,” Ms. Tai described the new agreement. 1.2 million jobs in aerospace and related industries, according to her, would be safeguarded if the dispute could be resolved.

According to her, “President Obama frequently says that we are strongest when we work with our friends and allies. Because of the high-wage jobs and the robust supply chain, “Supporting Boeing means supporting the American economy.”

As a result of his meeting with EU leaders, including EU Commission President Ursula von der Leyen and Council of Europe President Charles Michel, Vice President Biden has promised to ease trade tensions with allies.

Mr. Biden lavished praise on the European Union at the G7 summit meeting in London, where he was seated with French President Emmanuel Macron. European Union “has a lot to do with Western Europe’s ability to handle its economic issues as well as provide the backbone and support for NATO,” Vice President Biden said.

President Donald J. Trump had previously described NATO members as “free riders” on American military budgets, but his new statements show a marked shift in attitude.

In some ways, the European Union has a greater influence on American life than any other multilateral institution because of its enormous market and trading bloc economic power. In order to limit the damaging effects of China’s rise, Mr. Biden wants more support from Europeans. The Europeans do a lot of trade with China.

China’s human rights abuses at home, shady trade practises, and widespread industrial espionage are hardening the resolve of major European countries like Germany, France, and Italy to join the United States in an adversarial relationship with China. Similar to the American interagency committee on foreign investment (CFIUS), the EU has agreed on a voluntary investment screening programme.

US-EU trade tensions are still high due to a stalemate over tariffs on steel and aluminium imposed under President Donald Trump’s administration. The “national security” provisions used by President Trump to impose the tariffs triggered a larger trade war.

Some $3.4 billion in American imports, including Harley-Davidson Inc. motorcycles, Levi Straus & Co. jeans, and bourbon whiskey, were targeted by the European Union in retaliation.

As a result of the May suspension of retaliatory tariffs, the European Union hoped to work with Vice President Biden and his administration to find a long-term solution to the global overcapacity of steel.

As Mr. Dombrovskis put it, Mr. Biden must “walk the talk” of comity by removing the tariffs in question.

Transatlantic data flows and digital privacy, carbon border taxes, and digital taxes are also on the table for discussion between the two sides.

A new Trade and Technology Council will be established, which will more formally address trade and technical standards. China’s digital ambitions in fields like artificial intelligence and cybersecurity should be curtailed, in part, by agreeing on how to screen Chinese investments in those areas that could have security implications for Europe and the United States,

There will be an interagency body to coordinate with Brussels in areas like standards for artificial intelligence, quantum computing, and biotechnology, coordination of supply chain resilience as well as investment screening and export controls,” a senior American official said on Thursday.

Chinese non-market practises, economic exploitation, and efforts to shape the rules of the road for the 21st century will be a focus of work on council, a senior administration official said.

However, EU officials say standards are difficult because systems differ. They cite 5G infrastructure (read Huawei) and semiconductors as possible topics for discussion.