EU Says It Has Resolved 17-Year Aircraft Trade Battle With U.S.

BRUSSELS (Reuters) -
Models of Boeing 747 and 777 passenger planes are displayed at the Boeing booth as part of the China International Aviation & Aerospace Exhibition in Zhuhai, China, in 2012. (REUTERS/Bobby Yip/File Photo)

The European Union and the United States have resolved their near 17-year conflict over aircraft subsidies, the EU said on Tuesday, bringing to a close one set of Trump-era tariffs which had soured relations between them.

The two sides have been battling since 2004 in parallel cases at the World Trade Organization over subsidies for U.S. planemaker Boeing and European rival Airbus.

They agreed in March to a four-month suspension of tariffs on $11.5 billion of goods from EU wine to U.S. tobacco and spirits, which they had imposed in response to the row. On Tuesday they were set to remove them for five years, while still working on an overall deal on what subsidies to allow.

“This meeting has started with a breakthrough on aircraft. This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft – after 17 years of dispute,” European Commission president Ursula von der Leyen said before an EU-U.S. summit with U.S. President Joe Biden.

The agreement should allow them to focus on the threat posed by China’s nascent commercial aircraft industry.

It will also remove one of two major trade irritants left over from Donald Trump’s presidency, the other being tariffs imposed on grounds of national security on EU steel and aluminum imports.

The European Commission, which oversees EU trade policy, last month suspended for up to six months a threatened June 1 doubling of retaliatory tariffs on Harley-Davidson motorbikes, U.S. whiskey and motorboats, and refrained from slapping tariffs on more U.S. products from lipstick to sports shoes.

Brussels and Washington have said they would seek to address excess global capacity largely centered in China.

The United States may find it tougher to remove the metals tariffs, which also apply to other countries such as China, because they are still backed by many U.S. metal producers and workers.

Brussels is also pushing what it dubs a new “positive agenda” on trade with Washington, including forging an alliance to drive WTO reform.

The two are also likely to agree to cooperate on trade and technology, such as for setting compatible standards and facilitating trade in artificial intelligence.