Boeing-Airbus dispute settled: EU and USA defuse one of their most challenging trade conflicts

Like you to me, like me to you: According to this principle, there has been a back and forth between the EU and the USA in the dispute over subsidies for aircraft construction for years. Now the EU is confirming a breakthrough.

The EU and the US have reached a compromise in the dispute over punitive tariffs over subsidies for Airbus and Boeing, thereby defusing one of their most challenging trade conflicts. This was confirmed by the EU Commission chief Ursula von der Leyen on Tuesday on the sidelines of the EU-US summit in Brussels. She has not yet given details of the compromise. According to information from EU circles, the reciprocal punitive tariffs are to be suspended for five years.

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“This meeting started with a breakthrough.”
“This meeting started with a breakthrough among aircraft manufacturers,” said von der Leyen in writing. “This really opens a new chapter in our relationships as we move from lawsuits to cooperation on aircraft – after 17 years of disputes.” Von der Leyen had previously said that she expected an agreement with US President Joe Biden this Tuesday.

Both sides had sued the arbitration tribunal of the World Trade Organization (WTO) over the respective subsidies for their own companies. The aircraft manufacturers Boeing and Airbus are keen competitors in the world market for aircraft. They received strong support from their governments – illegally, as the WTO has established.

Boeing-Airbus dispute settled: arbitrators had allowed the US to impose punitive tariffs.
Both sides have distorted competition through unauthorized state support for the companies, conciliators held in two separate rulings. The EU and the USA had passed all judgments before the arbitration tribunal of the WTO.

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Because Airbus had not completely dismantled the subsidies complained of, arbitrators allowed the USA in October 2019 to levy punitive tariffs on goods worth 7.5 billion dollars (around 6.2 billion euros today) a year. That was the highest amount since the WTO was founded in 1995.

The US immediately released tariffs on cheese, butter, wine, components for the aviation industry and other products from Europe of up to 25 percent. They mainly punished countries that supported Airbus: Germany, France, Spain, Great Britain.

The EU also imposed punitive tariffs.
About a year later, the same thing happened in the Boeing case: Because the US government and authorities did not completely stop the illegal promotion of the US company, WTO mediators of the EU approved punitive tariffs on US imports amounting to just under $ 4 billion (today around $ 3 billion), 2 billion euros) per year.

The EU also imposed tariffs on aircraft components and agricultural and industrial goods from the USA of up to 25 percent. The consumer pays the bill on both sides: this makes imported products more expensive.

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