US-EU agree ceasefire in long-running trade war over aircraft subsidies

Deal agreed during Joe Biden’s trip to Brussels as White House seeks to focus on threat posed by China

A five-year ceasefire in the long-running US-EU trade war over subsidies to aircraft makers has been agreed during Joe Biden’s visit to Brussels, as the White House sought to focus attention on the greater threat said to be posed by China.

Billions of euros and dollars worth of tit-for-tat tariffs imposed on the US manufacturer Boeing and its European rival Airbus will be suspended after both sides committed to work on removing unfair subsidies.

As an EU member state, the UK had also been hit by US tariffs linked to the dispute and the government had imposed its own on American goods. Those were mutually suspended in March.

It is understood the US trade representative, Katherine Tai, will meet the international trade secretary, Liz Truss, on Wednesday and a longer-lasting ceasefire is expected, in the mould of Biden’s deal with the EU.

The European Commission president, Ursula von der Leyen, described the announcement of a suspension of tariffs between the EU and the US as a “breakthrough”.

“This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft – after 17 years of dispute,” she said.

Tai said it reflected the desire of the new administration to stop clashing with its allies in light of the challenge posed by Beijing and ahead of Biden’s meeting with the Russian president, Vladimir Putin, on Wednesday.

“Today’s announcement resolves a longstanding trade irritant in the US-Europe relationship,” Tai said. “Instead of fighting with one of our closest allies, we are finally coming together against a common threat.

“We agreed to work together to challenge and counter China’s non-market practices in this sector in specific ways that reflect our standards for fair competition.”

An Airbus spokesperson said: “Airbus welcomes news of an agreement between the European Commission and USTR regarding the WTO dispute on large civil aircraft.

“This will provide the basis to create a level-playing field which we have advocated for since the start of this dispute. It will also avoid lose-lose tariffs that are only adding to the many challenges that our industry faces.”

The tariffs applied by both sides had been temporarily suspended since 11 March. The new agreement will officially go into effect on 11 July.

A minister-level working group will be established to discuss limits on subsidies and both sides agreed to ensure funding will not “harm the other side”. The two sides also pledged to work together in “addressing non-market practices of third parties”.

The announcement came at the end of a summit in Brussels attended by Biden, Von der Leyen and the European Council president, Charles Michel, the first such meeting in seven years.

“I think the future is very, very bright, we have the opportunity to do some very good things,” Biden said.

The US president, after attending the G7 meeting in Cornwall and a Nato gathering in Brussels, chose not to join Von der Leyen and Michel at a post-summit press conference but he will travel next to Geneva to hold talks with Putin.

Under a joint EU-US statement, it was further agreed that Brussels and Washington would establish a forum on Russia to exchange ideas on tackling disruptive moves by Moscow, including cyber-attacks and disinformation.

About $11.5bn (£8.2bn) of tariffs had been applied on goods ranging from EU wine to US tobacco and spirits over the issue of state subsidies for aircraft manufacturers Boeing and Airbus. The row had become the longest running dispute in the history of the World Trade Organization. Both sides said the disagreement had been a serious drain on economic growth.

The French president, Emmanuel Macron, welcomed the deal, saying it would help French winemakers. “This is effective cooperation. This is good news for our wine producers,” he said.

Tai said tariffs could be reapplied at any point, however, if it was found that US companies were not being allowed to “compete fairly”. There was also no commitment by Biden to lift tariffs applied by Donald Trump on EU steel and aluminium, part of a separate dispute.

Von der Leyen insisted she was confident a solution would be found before the end of the year on steel and hailed a new understanding between Brussels and Washington. She said the EU would hold fire for six months on countermeasures it could have imposed on US steel and aluminium.

Germany’s economy minister, Peter Altmaier, said the accord was “a great relief”. Bruno Le Maire, France’s minister for economy and finance, said he hoped for a “permanent” end to the dispute.

Source: Read Full Article