After almost 17 years, the European Union and the United States have reached an agreement over a long-running conflict relating to subsidies for large civil aircraft. Under this new agreement, a Working Group on Large Civil Aircraft will be established and led by the Minister responsible for trade from both the United States and the European Commission.
The European Commission President Ursula von der Leyen described today’s agreement as “a major step” in resolving the longest trade dispute in the history of the WTO. While the United States Trade Representative, Katherine Tai stated that this agreement includes a commitment for “concrete, joint collaboration to confront the threat from China’s non-market practices.”
Both the United States and the European Union have agreed to suspend these tariffs for a period of five years. According to the European Commission, both parties aim “to preserve a level playing field” between both aircraft manufacturers and will continue to work together “to prevent new differences from arising.”
In a statement, the European Commission Executive Vice-President Valdis Dombrovskis said “With this agreement, we are grounding the Airbus-Boeing dispute. It proves that the transatlantic relationship is now moving to the next level and that we can work with the US on tackling long-running disputes.”
This particular trade disagreement between the European Union and the United States dates back as far as 2004, when the US filed a case against the EU to the World Trade Organisation (WTO) over “illegally subsidising” the European civil aircraft manufacturer, Airbus.
The European Union quickly retaliated, filing a complaint against the United States with the World Trade Organisation. The complaint which was lodged in May 2005 was about the “unlawful support” that was given to the US aircraft manufacturer, Boeing.
For a long time, these two disputes between the United States and the European Union remained unresolved with neither trading partner willing to admit to unlawfullly funding their respective aircraft manufacturer.
Following a WTO ruling in May 2018 which found that the “EU and its Member States had not fully complied with the previous WTO rulings.” Under President Trump, the United States decided to impose tariffs against European exports worth up to USD 7.5 billion in October 2019. Earlier that year, the WTO also confirmed that the United States had in fact “continued its illegal support of its aircraft manufacturer Boeing” which was having a detrimental effect on Airbus.
Following the United States decision to impose tariffs on a number of EU goods in October 2019, the EU responded and decided to impose countermeasures on US exports to the EU worth USD 4 billion in November 2020. The European Union estimates that businesses on both sides of the Atlantic have had to pay over 3.3 billion dollars in duties.
However, after almost 17 years, the United States and the European Union now have an agreement in place with a clear set of principles that aims to address the large civil aircraft dispute. Under this cooperative framework, there will be an open and transparent process when it comes to funding research and development.
The European Union and the United States have also agreed to eliminate specific supports such as tax breaks for research and development purposes. In terms of other arrangements, both trading partners will now only be able to provide financing on market terms to large civil aircraft producers such as Boeing or Airbus.
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Source: https://aeronewsx.com/eu-and-us-agree-to-truce-over-aircraft-dispute/?utm_source=rss&utm_medium=rss&utm_campaign=eu-and-us-agree-to-truce-over-aircraft-dispute
