The United States and European Union have agreed to suspend the trade war between Airbus and Boeing and instead focus on a common rival: China.
Airbus-Boeing Feud Ends In Joint Bid To Counter China
For 16 years, Airbus and Boeing have waged an extended battle against one another over state aid and aircraft subsidies. Boeing claimed Airbus benefits from sate aid in a way that distorts markets while Airbus claimed Boeing benefits from state aid in a way that distorts that markets. Both were valid charges.
That led both the European Union and United States to file charges at the World Trade Organization (WTO). In 2019, the WTO ruled the USA could impose tariffs on Airbus (though Delta found a creative way around them). The Trump Administration imposed tariffs almost immediately. In 2020, the WTO allowed the European Union to impose tariffs on Boeing.
Today, both sides agreed to suspend tariffs for five years and instead jointly work to counter China’s aircraft production ambitions in a way “that reflect our standards for fair competition.”
Ursula Von Der Leyen, President of the European Union, announced the breakthrough on Twitter:
The meeting started with a breakthrough on the aircraft dispute.
Today we move from litigation to cooperation.
We are ending the longest trade dispute in the history of the WTO.
We are delivering. pic.twitter.com/h3kKqQSHgv
— Ursula von der Leyen (@vonderleyen) June 15, 2021
U.S. Trade Representative Katherine Tai added:
“Today’s announcement resolves a long-standing irritant in the U.S.-EU relationship. Instead of fighting with one of our closest allies, we are finally coming together against a common threat.
“This deal will shore up the longer-term competitiveness and innovation of a key sector — aircraft — that is one of the most important sources of middle-class jobs at home.”
Nevertheless, Kai warned that tariffs on European goods would be re-imposed if Airbus breaks the deal. The deal is expected to save more than 1.2 million jobs.
The deal comes as President Joe Biden wraps up his first overseas trip as POTUS. The United Kingdom hopes to reach a similar deal with the USA in the coming days.
Airbus’ Chief Commercial Officer Christian Scherer praised the deal:
“Anything that levels the playing field in this highly competitive industry and avoids this terrible lose-lose proposition of tariffs across the Atlantic or across any borders for that matter is good.”
But state support for Airbus and Boeing will continue. This is a fragile peace.
Airbus and Boeing are no longer at war. Both sides will turn a blind eye to state aid, which seems the only logical agreement in light of entrenched interests on both sides of the Atlantic.
image: @vonderleyen / Twitter