BRUSSELS — The United States and the European Union reached a deal Tuesday to end a damaging dispute over subsidies to rival plane makers Boeing and Airbus and phase out billions of dollars in punitive tariffs, the U.S. trade envoy said.
U.S. Trade Representative Katherine Tai said the two sides have come to terms on a five-year agreement to suspend the tariffs at the center of the dispute. She said they could be reimplemented if U.S. companies are not able to “compete fairly” with those in Europe.
“Today’s announcement resolves a long-standing irritant in the U.S.-EU relationship,” Tai said, as President Joe Biden met with EU leaders in Brussels. “Instead of fighting with one of our closest allies, we are finally coming together against a common threat,” stressing it was time to put aside the fight and focus on China’s economic assertiveness.
With the move, Biden eases a major point of tension in the trans-Atlantic relationship at a moment he’s seeking to marshal widespread European support for his efforts to counter Russia prior to his Wednesday meeting in Geneva with Putin.
The trade dispute skyrocketed under the Trump administration, and saw tit-for-tat duties slapped on a range of companies that have nothing to do with aircraft production, from French winemakers to German cookie bakers in Europe and U.S. spirits producers in the United States, among many others.
The U.S. imposed what could have amounted to $7.5 billion in tariffs on European exports in 2019 after the World Trade Organization ruled that the EU had not complied with its rulings on subsidies for Airbus, which is based in France. The EU retaliated last November with up to $4 billion in punitive duties after the WTO ruled that the U.S. had provided illegal subsidies to Seattle-based Boeing.
In March, weeks after Biden had taken office, the two sides agreed to suspend the tariffs. That suspension started on March 11 for four months. The new agreement will officially go into effect on July 11.
“This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft — after 17 years of dispute,” said European Commission President Ursula von der Leyen.
Despite the breakthrough, the deal does not end the Trump-era trans-Atlantic trade row. The former U.S. president also slapped duties on EU steel and aluminum. That move enraged European countries, most of them NATO allies, because it was justified as a measure to protect U.S. national security.
The so-called Article 232 proceeding both hurts European producers and raises the cost of steel for American companies. The EU retaliated by raising tariffs on products like U.S.-made motorcycles, bourbon, peanut butter and jeans.
Joint U.S.-EU council
Even without resolving all trade disputes, White House officials expressed confidence that they can build more goodwill with Europe ahead of the face-to-face meeting with Putin.
The White House on Tuesday announced the creation of a joint U.S.-EU trade and technology council.
The council will work on coordinating standards for artificial intelligence, quantum computing and bio-technologies, as well as coordinating efforts on bolstering supply chain resilience. Biden is appointing Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo and Tai to co-chair the U.S. side of the effort.
The White House said the two sides will also discuss efforts to stem climate change and launch an expert group to determine how best to reopen travel safely as the coronavirus pandemic ebbs.
The U.S.-EU summit is also expected to include a communique that will address concerns about China’s provocative behavior.
That statement would follow a NATO summit communique on Monday that declared China a constant security challenge and said the Chinese are working to undermine the global rules-based order. On Sunday, the Group of Seven nations called out what it said were China’s forced labor practices and other human rights violations against Uyghur Muslims and other ethnic minorities in the western Xinjiang province.