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The EU and the United States are ready to resolve a 17-year dispute over subsidies to aircraft, raising the threat of billions of dollars in punitive tariffs on their economies in a boost to transatlantic relations.
Diplomats and officials confirmed Monday night that two days of intense negotiations in Brussels had left the EU and the Biden administration about to confirm an agreement on subsidy rules for Airbus and Boeing. The breakthrough will take shape on Tuesday at the first meeting of the EU-US summit of US President Joe Biden in Brussels.
People close to the talks said that the governments of the three countries of origin of Airbus in the EU (Germany, France and Spain) were being consulted on an agreement that could be confirmed on Tuesday morning if there were no obstacles to last minute.
The agreement, which could be broken, is likely to take the form of a multi-year agreement on grant limits, people reported on the talks.
A significant advance would raise a cloud of uncertainty over the airline sector and also eliminate the threat that EU and US consumer goods could once again be subject to punitive tariffs due to the dispute.
These duties, in a wide range of products, from French wine to U.S. liqueurs and sugar cane molasses, were suspended after the EU and the US agreed in March to lift them for four months and start negotiations on a solution.
$ 7.5 billion
Extra tariffs imposed by the United States on European goods in October 2019
The Airbus-Boeing dispute is one of the longest battles in the history of the World Trade Organization; a disagreement both parties have acknowledged that they could getting worse while trying to forge closer cooperation to deal with China’s 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 struggled to reach an agreement on the line.
Tai’s office declined to comment.
Companies on both sides of the Atlantic have long been calling for a solution. The matter took on more urgency after the US turned to European exports worth $ 7.5 billion with additional fees in October 2019, while the EU imposed additional US $ 4 billion in export duties last year. Both sets of measures were in line with WTO rulings in favor of each party.
But over the years, it has been found that both the United States and the EU have been unable to properly implement the WTO panel’s rulings on illegal subsidies for their aircraft manufacturing champions.
EU and US trade officials stressed the complexity of the dispute, and each side responded to the other’s claim to comply with WTO decisions. The nature of subsidies on both sides of the Atlantic is also very different, with EU officials pointing to major U.S. defense contracts as an example.
The end of the Airbus-Boeing dispute would eliminate a major irritant in trade relations, but others remain.
Brussels last month halted rising tariffs on US goods as a gesture of goodwill in a disagreement over Trump-era tariffs on European steel and aluminum.
The two economies have not yet completely buried their differences digital taxes, with the topic now linked to wider international conversations.
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