The EU and US are poised to resolve a 17-year dispute over aircraft subsidies, lifting the threat of billions of dollars in punitive tariffs on their economies in a boost to transatlantic relations.
Diplomats and officials confirmed on Monday night that two days of intensive negotiations in Brussels had left the EU and the Biden administration with a draft deal on subsidy rules for Airbus and Boeing. The breakthrough is set to be finalised on Tuesday at US president Joe Biden’s first EU-US summit meeting in Brussels.
“I am very positive that we will find an agreement on the Airbus-Boeing issue today, in our conversation with our American friends,” Ursula von der Leyen, the European Commission president, said on Tuesday morning. “I am very positive and convinced that we will deliver together today.”
People close to the talks said the governments of Airbus’s three home countries in the EU — Germany, France, and Spain — were being consulted on the draft deal ahead of it being confirmed on Tuesday.
The deal will take the form of a five-year accord to suspend punitive tariffs linked to the disagreement, coupled with the creation of a working group and ministerial dialogue on subsidy limits, according to people close to the talks.
The intention is that this will ensure the disagreement never re-emerges, including for new aircraft models.
The breakthrough will lift a cloud of uncertainty hanging over the airline sector, while removing the threat that EU and US consumer goods could again be hit with punitive tariffs because of the dispute.
Those duties — on a wide range of products, from French wine to US spirits and sugarcane molasses — were suspended after the EU and US agreed in March to lift them for four months and to start negotiations on a solution.
$7.5bn
Extra tariffs imposed by the US on European goods in October 2019
The Airbus-Boeing dispute is one of the longest running battles in the history of the World Trade Organization — a disagreement both sides have acknowledged they could increasingly ill-afford as they seek to forge closer co-operation in dealing with China’s model of state capitalism.
EU trade commissioner Valdis Dombrovskis held talks with US trade representative Katherine Tai and commerce secretary Gina Raimondo in the days leading up the summit as the sides strove to get an agreement over the line.
Tai’s office declined to comment.
Companies on both sides of the Atlantic have long called for a solution. The matter took on greater urgency after the US targeted European exports worth $7.5bn with extra tariffs in October 2019, while the EU imposed additional duties on $4bn of US exports last year. Both sets of measures were in line with WTO rulings in favour of each side.
But both the US and EU have been found over the years to have failed to properly implement WTO panel rulings on illegal subsidies for their aircraft manufacturing champions.
EU and US trade officials emphasised the complexity of the dispute, with each side taking issue with the other’s claim to have complied with WTO decisions. The nature of subsidies on each side of the Atlantic is also very different, with EU officials pointing to sizeable US defence contracts as one example.
The end of the Airbus-Boeing dispute would remove one important irritant in trade relations, but others remain.
Brussels last month held back from increasing tariffs on US goods as a goodwill gesture in a disagreement over Trump-era tariffs on European steel and aluminium.
The two economies are also yet to fully bury their differences over digital taxes, with the issue now tied up with broader international talks.