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EU, US agree to suspend tariffs in aircraft dispute

March 5, 2021

European Commission President Ursula von der Leyen described the Joe Biden presidency as a "fresh start." The pair are seeking to rebuild relations, starting with a trade breakthrough in the Airbus-Boeing dispute.

An Airbus A380 takes off behind a Boeing 787 plane at the Paris Air Show in 2011
The breakthrough in the Airbus-Boeing dispute has been praised as a "positive signal" for trans-Atlantic tiesImage: picture-alliance/dpa/E. Laurent

The European Union and the United States agreed on Friday to suspend tariffs imposed on billions of dollars of imports in a dispute over aircraft subsidies that goes back 16 years.

US President Joe Biden and European Commission chief Ursula von der Leyen clinched the breakthrough agreement as the two powerhouses seek to rebuild trans-Atlantic relations following the turbulent four years of the Donald Trump administration.

What did they agree?

After a phone call between Biden and von der Leyen, both sides recognized the need for a four-month suspension of tariffs used in the longstanding feud between planemakers Airbus and Boeing.

The US tariffs cover EU airplanes and plane parts. Wine and jam from France and Germany, and Spanish olives, were also on the tariff-free menu, as well as coffee, liqueurs, cheese and pork from across the European Union.

Von der Leyen said that "as a symbol of this fresh start, President Biden and I agreed to suspend all our tariffs imposed in the context of the Airbus-Boeing disputes, both on aircraft and non-aircraft products, for an initial period of four months."

Following the agreement, Biden pledged to "repair and revitalize" relations between Washington and Brussels. The US president said he and von der Leyen agreed to "work towards resolving these long running disputes at the WTO," according to a White House statement.

What challenges remain?

The two sides said in a joint statement that the stoppage would cover all US tariffs on $7.5 billion (€6.3 billion) of EU imports and all EU duties on $4 billion of US products, which resulted from long-running World Trade Organization (WTO) cases over subsidies for Airbus and Boeing.

The move would ease the burden on the industry and its workers, while focusing efforts on resolving the longstanding disagreement, the statement added.

However, the US said any long-term agreement would need to focus on China.

Key elements of a solution would include outstanding and future support measures, monitoring and enforcement, and "addressing the trade distortive practices of, and challenges posed by, new entrants from non-market economies, such as China."

How has the move been received?

EU trade chief Valdis Dombrovskis hailed a new beginning in the bloc's relationship with its most significant trading partner.

"Removing these tariffs is a win-win for both sides, at a time when the pandemic is hurting our workers and our economies," he said.

France also welcomed the move as a "first step in an de-escalation process."

"We are now going to work with the Commission and our European partners over the next four months on new rules on public aid to the aeronautics sector, in line with our interests and without any naivety," French Trade Minister Franck Riester said in a statement.

Friday's agreement between Brussels and Washington mirrors the four-month tariff freeze agreed on Thursday by the United States and Britain.

jsi/rs (AP, Reuters)