U.S., EU Agree to Suspend Tariffs in Boeing-Airbus Dispute

U.S., EU Agree to Suspend Tariffs in Boeing-Airbus Dispute

The European Union and the U.S. agreed to suspend tariffs on billions of dollars of each other’s products, easing a 17-year transatlantic dispute over illegal aid to the world’s biggest aircraft makers.

President Joe Biden and European Commission President Ursula von der Leyen agreed to the move on a call Friday, the commission said in a statement.

“This suspension will help restore confidence and trust, and therefore give us the space to come to a comprehensive and long-lasting negotiated solution,” European Commission Executive Vice-President and Trade Commissioner Valdis Dombrovskis said in a separate statement. “A positive EU-U.S. trade relationship is important not only to the two sides but to global trade at large.”

Key elements of a negotiated solution will include disciplines on future support in this sector and addressing the “trade-distortive practices” of new entrants to the sector from non-market economies such as China, the U.S. and EU said in a joint release.

The fight over aid to Airbus SE and Boeing Co. has resulted in duties -- authorized by the World Trade Organization -- that target a combined $11.5 billion in transatlantic trade and affect a range of industrial, agricultural and consumer goods. The EU hit $4 billion of American products in November -- about a year after Donald Trump’s administration ignored European pleas to refrain from imposing levies on $7.5 billion of imports from the bloc.

Through its duties, the U.S. has targeted key European products like French wine and Spanish olives while Europe has hit U.S. tractors, nuts and fruit.

Some of the companies affected by the tariffs -- among the largest approved by the WTO to date -- include European luxury brand owners such as LVMH Moet Hennessy Louis Vuitton SE that owns Givenchy and Fendi, alcoholic-beverage maker Bacardi Ltd., Caterpillar Inc. and Microsoft Corp.

U.S., EU Agree to Suspend Tariffs in Boeing-Airbus Dispute

Airbus said it welcomed the decision. The company “supports all necessary actions to create a level playing field and continues to support a negotiated settlement of this long-standing dispute to avoid lose-lose tariffs,” it said in a statement.

The move is a “hopeful signal” that a negotiated settlement that will permanently remove the duties is close, said Myron Brilliant, the executive vice president and head of international affairs at the U.S. Chamber of Commerce.

“The clock is running now: The transatlantic economy needs this deal,” he said.

On Thursday, the U.S. said it will suspend retaliatory tariffs on U.K. products caught up in the aircraft-subsidy dispute in a boost for post-Brexit Britain’s trade agenda.

The suspension -- which will also last four months -- will enable a “focus on negotiating a balanced settlement to the disputes,” the U.K. government said. The decision means goods like Scotch whisky, biscuits and clotted cream can be imported to the U.S. from Britain without being subject to an additional 25% duty.

The WTO previously ruled that the governments of Germany, France, Spain and the U.K. provided Airbus with illegal subsidies through launch-aid loans for aircraft development, equity infusions, debt forgiveness and various other financial contributions.

The Geneva-based trade body also ruled that in the U.S., Boeing benefited from illegal subsidies through a since-withdrawn Washington state business and occupation tax break.

Both sides say they want to settle the matter but an agreement proved elusive during the Trump administration, which demanded both a European pledge to end aid to Airbus and a repayment of the subsidies.

“We’re finally coming out of the trade war between the U.S. and Europe, which only creates losers,” French Finance Minister Bruno Le Maire said on his Twitter account. “I’m pleased for our French wine makers. Let’s keep going down the path of cooperation to get to a definitive agreement. In this crisis period, it must be time for reconciliation.”

The tariff-removal announcement doesn’t resolve all trade disputes between the EU and U.S., and many products remain affected by levies imposed because of other fights.

A 25% EU duty on American whiskey that was imposed after Trump placed tariffs on steel and aluminum imports remains in place, and the U.S. Distilled Spirits Council wants a resolution to that conflict, calling its industry “collateral damage” in the fight.

Shipments to the EU of whiskey -- the U.S.’s largest spirits-export category -- have plunged 37% since the tariffs started, the council said in a statement. The duty will double to 50% on June 1.

“With the recent announcement, it appears bourbon may be the only victim of the senseless Trump trade wars,” said Kentucky Democrat John Yarmuth, the co-chairman of the Congressional Bourbon Caucus. “I trust the Biden team will act to prevent the devastating impacts of impending tariff increases on one of America’s most dynamic industries.”

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