The United States and the European Union reached a deal Tuesday 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, reported AP.
The deal brings a fresh dose of international goodwill for Biden as he heads into a potentially thorny summit on Wednesday with Russian President Vladimir Putin. It’s also good news for an airline sector that has been ravaged by coronavirus travel restrictions.
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.
Both sides said they would also work together to analyze and address the “non-market practices of third parties that may harm our large civil aircraft sectors,” according to the EU’s executive branch.
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.
But von der Leyen said that to secure progress on Airbus-Boeing, the EU agreed to hold fire for six months on a set of steel and aluminum-related countermeasures it could have imposed just before this summit. She expressed cautious optimism that a deal could be reached here too by year’s end.
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