EU, US strike deal to end Airbus-Boeing dispute

The United States and the European Union reached a deal on Tuesday to end a damaging dispute over subsidies to rival plane makers Boeing and Airbus and phase out billions of dollars in punitive tariffs, the US trade envoy said.

US Trade Representative Katherine Tai said the two sides have come to terms on a five-year agreement to suspend the tariffs at the center of the dispute. She said they could be reimplemented if US companies are not able to "compete fairly" with those in Europe.

"Today's announcement resolves a long-standing irritant in the US-EU relationship," Tai said, as US President Joe Biden met with EU leaders in Brussels. "Instead of fighting with one of our closest allies, we are finally coming together against a common threat."

EU chief Ursula von der Leyen said: "This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft."

The dispute saw tit-for-tat duties worth $11.5 billion slapped on a range of companies that have nothing to do with aircraft, from French winemakers to German cookie bakers in Europe and US spirits producers, among many others.

Tai and her EU counterpart Valdis Dombrovskis had their first face-to-face meeting on Monday, which was seen as an opportunity to tie up a new treaty.

Such a breakthrough proved beyond reach, however, but with currently suspended tariffs set to come back into force after July 11, the two sides have come to what Reuters called a standstill agreement. This buys another year for Biden to rebuild relations with the EU from the perilous state they were left in by his predecessor Donald Trump.

Moves toward resolution have been slowed down by the extra bureaucracy created by Brexit.

The United Kingdom is one of the four core states involved in the Airbus project, which provides 14,000 jobs in the UK. This commitment predates the country joining what went on to become the EU in the early 1970s. So any deals relating to the US and Airbus' EU member states－Germany, France and Spain－also require a separate parallel document for the UK.

Stopping the reintroduction of tariffs will not only help Airbus and Boeing, but also many other peripheral industries that were sucked into the dispute.

New player targeted?

It is believed one of the reasons the two sides are eager to find a resolution is so that they can focus on the challenge presented by China's ambitions to become a major player in commercial aircraft production.

In May, Tai told Reuters that the two sides needed to pay attention to "the bigger question" of China's plans. US Chamber of Commerce Senior Vice-President Marjorie Chorlins said on Monday that "there's no question that the rise of China's aircraft industry is ... on everybody's proverbial radar".

Agencies contributed to this story.