By Favour Nnabugwu
The European Union (EU) and the United States are set to end their 17-year dispute over aircraft subsidies involving Airbus and Boeing.
After holding talks at a US-EU Summit in Brussels, both parties have agreed to suspend punitive tariffs for five years and cooperate more closely.
After a 17-year-long disagreement involving subsidies for aerospace manufacturers Airbus and Boeing, the EU and US have finally arrived at a resolution. Officials from all parties involved confirmed the news this Tuesday, including President Joe Biden at the US-EU Summit in Brussels.
The agreement will suspend an estimated $11.5 billion worth of punitive tariffs imposed by the EU and US for five years. Various products, including wine, tobacco, cheese and spirits, were previously slapped with hefty tariffs as both sides engaged in retaliatory trade skirmishes.
Additionally, both parties will work closely on developing new aircraft and adhere to standards of fairness and transparency
“Today’s announcement resolves a long-standing irritant in the U.S.-EU relationship. Instead of fighting with one of our closest allies, we are finally coming together against a common threat.”
An agreement over the dispute has been brewing for some time, with the Biden administration hoping to ease tensions that grew during Trump’s presidency. In March, the EU and US agreed to suspend the aforementioned tariffs for four months as they worked towards a more lasting resolution.
European Commission President Ursula von der Leyen said of the agreement,
This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft — after 17 years of dispute.”
Along with the suspension of tariffs, the EU and US have agreed to not provide specific support for any one manufacturer. The Airbus-Boeing dispute broke out due to accusations of unfair favoritism from both sides. In 2004, the US claimed Airbus had received billions in unfair subsidies from European governments, with the EU counter-claiming Boeing had received similar aid from the US.
According to an EU statement, both sides will seek to “preserve a level-playing field between our aircraft manufacturers and will also work to prevent new differences from arising.”
The EU and US are also concerned about the non-market practices of other countries, with U.S Trade Representative Katherine Tai mentioning China by name.
Additionally, the EU and US will work together to provide research and development funding and establish a fair, transparent process for cooperation in the future.
Under an accord titled ‘Understanding on a cooperative framework for Large Civil Aircraft’, the EU and US have agreed to: Refrain from R&D funding as well as specific support (such as specific tax breaks) to their own producers that would harm the other side.
Offer financing to large civil aircraft producers on market terms.
Provide R&D funding through an open and transparent process and make the results of fully government-funded R&D widely available.
Collaborate on addressing non-market practices of third parties that may harm their respective large civil aircraft industries.
Establish a ‘Working Group on Large Civil Aircraft’ led by each side’s respective Minister responsible for Trade.
European Commission Executive Vice-President Valdis Dombrovskis summarized,
“With this agreement, we are grounding the Airbus-Boeing dispute… We now have time and space to find a lasting solution through our new Working Group on Aircraft, while saving billions of euros in duties for importers on both sides of the Atlantic.”
Shares in Boeing and Airbus both went up by 0.5 percent on Tuesday morning after the news broke. Airbus officials have celebrated the agreement, which the company states “will provide the basis to create a level-playing field which we have advocated for since the start of this dispute.” Christian Scherer, Airbus CCO, said at a media briefing today,
“From Airbus’s perspective, we’re clearly welcome that anything that levels the playing field in this highly competitive industry and avoids this terrible, lose-lose proposition of tariffs across the Atlantic or across any borders for that matter, is good… Anything that substantiates a long-term convergence between the two sides of the Atlantic on this is from my perspective really good.”
Boeing also praised the agreement in statement today, Boeing welcomes the agreement by Airbus and the European Union that all future government support for the development or production of commercial aircraft must be provided on market terms. Boeing will fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected.”