The EU and the US are set to resolve a 17-year dispute over aircraft subsidies, lifting the threat of billions of dollars in punitive tariffs on their economies to boost transatlantic relations.
Diplomats and officials confirmed on Monday evening that two days of intensive negotiations in Brussels had left the EU and the Biden administration about to confirm a deal on the subsidy rules for Airbus and Boeing. The breakthrough is expected to be finalized on Tuesday at US President Joe Biden’s first EU-US summit in Brussels.
People close to the talks said the governments of Airbus’ three home countries in the EU – Germany, France and Spain – were being consulted on a deal that could be confirmed on Tuesday morning if not there were no last minute obstacles.
The deal, which could collapse, is expected to take the form of a multi-year agreement on subsidy limits, people briefed on the talks said.
A breakthrough would lift a cloud of uncertainty over the airline industry while removing the threat that consumer goods in the EU and the US will again be hit with punitive tariffs because of the dispute.
These rights – on a wide range of products, from French wine to American spirits and sugarcane molasses – were suspended after the EU and US agreed in March to lift them for four months and start negotiations on a solution.
$ 7.5 billion
Additional tariffs imposed by the United States on European products in October 2019
The Airbus-Boeing dispute is one of the longest battles in the history of the World Trade Organization – a disagreement both sides have acknowledged could more and more unaffordable as they seek to forge closer cooperation in the face of the Chinese model of state capitalism.
EU Trade Commissioner Valdis Dombrovskis held talks with US Trade Representative Katherine Tai and Trade Secretary Gina Raimondo in the days leading up to the summit as the parties scrambled to get a deal on the line.
Tai’s office declined to comment.
Businesses on both sides of the Atlantic have long been clamoring for a solution. The case became more urgent after the United States targeted European exports worth $ 7.5 billion with additional tariffs in October 2019, while the EU imposed tariffs on $ 4 billion in US exports Last year. Both sets of measures were in line with WTO rulings in favor of each party.
But the US and EU have proven over the years to have failed to properly implement WTO panel rulings on illegal subsidies for their aircraft-making champions.
EU and US trade officials highlighted the complexity of the dispute, with each side contesting the other’s claim to have complied with WTO rulings. The nature of subsidies on either side of the Atlantic is also very different, with EU officials citing major US defense contracts as an example.
Ending the Airbus-Boeing dispute would remove a major irritant in trade relations, but others remain.
Last month, Brussels refrained from raising tariffs on U.S. goods as a sign of goodwill in a disagreement over Trump Era Tariffs on European steel and aluminum.
The two economies have not yet fully buried their differences on digital taxes, the issue now being linked to broader international discussions.
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