BRUSSELS – The United States and the European Union have reached an extended truce in their long-running dispute over aircraft subsidies.
Washington is conditionally suspending for five years the tariffs on Europe that were authorized by the World Trade Organization for unfair subsidies to Airbus, which is the largest aircraft manufacturer and prime competitor to Boeing of the United States.
“This meeting has started with a breakthrough on aircraft,” said European Commission President Ursula von der Leyen at the start of formal talks on Tuesday with U.S. President Joe Biden. “This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft after 17 years of dispute.”
The agreement “resolves a longstanding trade irritant in the U.S.-Europe relationship,” US Trade Representative Katherine Tai told reporters on a briefing call. “Instead of fighting with one of our closest allies, we are finally coming together against a common threat. We agreed to work together to challenge and counter China’s non-market practices in this sector in specific ways that reflect our standards for fair competition.”
Tai added that the agreement “is a model that we will use to build on for other challenges posed by China and non-market economic competition.”
European leaders rejoiced in welcoming Biden on Tuesday, who is taking the relationship in a different direction from the four years of the Donald Trump presidency in which tariffs, including on wine and cheese, were slapped on trans-Atlantic allies and they were berated for not adequately carrying the financial burden for their common defense in the North Atlantic Treaty Organization (NATO).
“I have a very different view than my predecessor,” Biden remarked as he stood for a ceremonial photograph inside the Europa Building between European Commission President von der Leyen and European Council President Charles Michel.
“America is back on the global scene,” remarked Michel. “It’s great news for allies, also great news for the world.”
Von der Leyen told Biden that his trip to Brussels “coming so early in your mandate underlines your personal touch to the EU and we really appreciate that. The last four years have not been easy.”
She repeated that last line at the start of the formal meeting.
Still unresolved is a trans-Atlantic dispute on steel and aluminum tariffs.
The European Union previously decided not to raise tariffs as planned and to hold off for six months to work together on the fundamental issue of overcapacity and find a common way forward on the challenge from China of dumping, subsidization, and overcapacity.
“Those negotiations and discussions are ongoing. They’ve been very constructive. They will take some time,” a senior U.S. official told reporters.
Meanwhile, a U.S.-EU Trade and Technology Council is being launched.
“The notion here is that the United States and Europe laid the foundation for the world economy after World War Two and now have to work together to write the rules of the road for the next generation, particularly in the areas of economics and emerging technologies,” according to a senior Biden administration official.
Washington and Brussels are also initiating dialogues on “Russia, cyber issues and migration,” according to the White House.
Battling the coronavirus pandemic and climate change were also on Tuesday’s agenda.
The U.S. and EU reiterated support for the COVAX facility for ensuring equitable access to COVID-19 vaccines and to work together on ways to promote a global recovery from the economic impacts of the pandemic. They also discussed efforts to reform the World Health Organization.
On climate change, the United States and the EU said they would reaffirm commitments to upholding the 2015 Paris climate agreement and to become climate neutral economies by 2050. They also said they plan to urge other “major players” to take ambitious climate actions. Adopted by nearly 200 nations when it was initially signed, the Paris climate agreement’s goal is to slow down global warming.