At a bilateral summit in Brussels on 15 June, the European Union and the United States announced an agreement to suspend - for five years - the tariff barriers put in place on both sides of the Atlantic in the context of the trade dispute between aircraft manufacturers Airbus and Boeing.
This decision is the result of intense negotiations over the past months between the offices of US Trade Representative Katherine Tai and EU Trade Commissioner Valdis Dombrovskis.
On 5 March, the EU and Washington had announced the suspension of these tariffs for a period of four months, with a view to finding a more sustainable solution (see EUROPE 12672/1). These tariffs, which ranged from 10 to 25%, affected aeronautical products, as well as selected agri-food products.
“We now have 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”, said Valdis Dombrovskis.
He announced, together with Katherine Tai, the creation of a bilateral Working Group dedicated to civil aviation. This will be a platform for dialogue and work to find a long-term solution to the problem of subsidies for aircraft manufacturers.
A set of principles to follow
While they have not yet found a definitive solution to the dispute, the EU and the US have committed to principles on aviation support. Subsidies for aviation industries must respect the terms of international trade. Member States, the EU and the US should not provide specific aid that could harm competition.
Finally, the agreement provides for both parties to actively engage in the fight against unfair practices by third countries.
“We need to work together to counteract aggressively non-market industries that will threaten ours”, said Katherine Tai.
The US Trade Representative’s comments reflected the US emphasis on the need to deal with the competition China represents. In its statement, the White House makes it clear that it wants to join forces with the EU to counter unfair Chinese practices.
Reactions
The Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, welcomed the announcement of the agreement between the two blocs: “This has been one of the longest running and most taxing disputes in the history of the WTO. And the two sides have shown that even the most seemingly intractable differences can be resolved”.
The European manufacturer Airbus welcomed the suspension, which it will directly benefit from. “This will provide the basis for creating the level playing field for which we have been arguing for since the beginning of this dispute. It will also allow for avoiding tariffs that add to the various obstacles faced by the industry”, an Airbus spokesperson told EUROPE.
The European spirits producers in the SpiritsEurope organisation also expressed their satisfaction. However, its managing director, Ulrich Adam, said he hopes that all tariffs for this industry will be suspended. “It is now critical that remaining differences get resolved as soon as possible, so that all remaining tariffs on spirits may be removed for good”, he said.
Steel and aluminium
On the steel and aluminium dispute between the EU and the US since 2018, no solution has yet been found. However, on 17 May, the EU took a step towards its partner by suspending the automatic increase in its current tariffs (see EUROPE 12720/14).
After former US President Donald Trump announced tariffs in this sector, the EU responded with tariffs on steel products, but also on agri-food products. It must now agree with its partner on a potential withdrawal of these tariffs on both sides.
“We need some time because it’s a complex issue. But I’m confident we will find a solution”, said European Commission President Ursula von der Leyen.
In addition, the Commission had put in place safeguard measures for steel and aluminium in 2018 as well, in the form of tariff quotas on these products. As these expire at the end of June, a dozen EU member states and a majority of MEPs are calling for an extension of these measures (see EUROPE 12723/8, 12726/15).
The Commission is expected to make a proposal in the coming weeks.
See the joint statement: https://bit.ly/3cM5oTw
See the White House press release: https://bit.ly/3xi0ZzA (Original version in French by Léa Marchal)