Tariff Cease-Fire: EU and US Make Peace on Trade to Focus on China Challenges

Written by | Thursday, June 17th, 2021

The European Union and United States have ended their oldest trade war in a show of transatlantic unity one day before US president Joe Biden met his Russian counterpart (16 June). The first summit between the EU leaders and US President Joe Biden brought to the end the 17-year old trade dispute over subsidies for rival aircraft manufacturers Boeing and Airbus that had seen billions of euros of punitive tariffs imposed on other products, such as tobacco and spirits. Commission President Ursula von der Leyen announced the agreement will suspend for five years the $11 billion tariffs that both sides imposed on products including EU wine or US motorcycles. “This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft – after 17 years of dispute,” she told reporters, adding that the deal will set a series of parameters to limit the financing that EU governments and US authorities can offer to their aircraft manufactures.
The deal on a five-year suspension of tariffs in the longstanding Airbus-Boeing dispute is widely seen as paving the way for stronger cooperation against the challenges posed by China’s economic model. To that end, the agreement represents an opportunity for Washington to bring closer the transatlantic partnership to face the growing challenge that China represents, including in the field of civil aviation. Eyeing Beijing, the two sides agreed to collaborate on addressing non-market practices of third parties that may harm their respective large civil aircraft industries. “It’s a model we can build on for other challenges posed by China’s economic model,” Biden said in a statement. Contrary to common practice, he did not address reporters after the summit with EU leaders.
European policymakers and agri-food stakeholders have welcomed the extension of the retaliatory tariff reprieve with the US for another five years, as well as the steps taken to end the civil aircraft dispute that has disproportionately affected the sector. The punitive tariffs affected both sides for a total value of $11.5 billion of trade, which led EU and US business to pay more than $3.3 billion in duties. According to the trade Commissioner Valdis Dombrovskis, the new truce is an attempt to ground the Airbus-Boeing dispute for good, saving “time and space to find a lasting solution through our new Working Group on Aircraft, while saving billions of euros in duties for importers on both sides of the Atlantic.” Brussels and Washington, however, did not make substantial progress in solving the other tariff dispute triggered by the Trump administration’s decision to punish the EU’s steel and aluminium exporters.

Article Categories:

Leave a Comment

Your email address will not be published.