US, EU reach deal to end 17-year aircraft trade dispute

President Biden and European Union leaders reached an agreement Tuesday to end the 17-year trade dispute over subsidies to Boeing and Airbus, officials said.

The development, which was announced as Biden participated in a U.S.-EU summit in Brussels as part of his first trip overseas as president, is likely to improve relations between the U.S. and Europe at a time when they are collectively trying to counter China’s rise.

“Today’s announcement resolves a longstanding trade irritant in the U.S.-Europe relationship,” U.S. Trade Representative Katherine Tai told reporters on a call.

“Instead of fighting with one of our closest allies, we are finally coming together against a common threat,” she continued. “We agreed to work together to challenge and counter China’s nonmarket practices in this sector in specific ways that reflect our standards for fair competition. This includes collaboration on inward and outbound investment and technology transfer.”

As part of the deal, both sides agreed to suspend tariffs related to the dispute for five years.

They also agreed to “clear statements on acceptable support for large civil aircraft producers and a cooperative process to address that support between our two parties and to overcome our longstanding differences,” Tai said.

The U.S. and EU in March had already agreed to a four-month suspension of the tariffs in a sign of easing tensions over trade. Tai said Tuesday that the new agreement would extend that suspension by five years on or before July 11.

The agreement resolves one of the longest-running disputes at the World Trade Organization that began in 2004 and resulted in tit-for-tat tariffs under former President Trump.

The EU in 2004 filed a complaint alleging Boeing had received billions in unfair subsidies from federal and state governments. The U.S. filed a similar complaint alleging Airbus had received unfair subsidies from European governments the same year. 

The dispute escalated under Trump, who imposed tariffs on a raft of European goods, like cheese and French wine, prompting the EU to impose tariffs on U.S. goods.

Biden in a statement described the deal as a “major breakthrough” and said it is indicative of how democracies can work together.

“This week, at the G7, at NATO, in my meeting with the leaders of the European Union, and in all my bilateral meetings with world leaders, I’ve been making the case that the U.S. and Europe — and democracies everywhere — are stronger when we work together to advance our shared values like fair competition and transparency,” Biden said. “Today’s announcement demonstrates exactly how that can work in practice.”

Biden has spent his first foreign trip seeking a clear shift from his predecessor, looking to ease tensions with European partners, demonstrate the importance of U.S. alliances and bring an end to the era of “America first” foreign policy.

“We are reasserting the fact that it is overwhelmingly in the interest of the United States of America to have a great relationship with NATO and with the EU,” Biden said Tuesday as he met with European Commission President Ursula von der Leyen and European Council President Charles Michel. “I have a very different view than my predecessor.”

However, Biden has not announced plans to lift tariffs on European steel and aluminum imposed by the Trump administration, which will likely be a continued source of tension between the U.S. and EU.

A senior administration official told reporters Monday that negotiations on the steel and aluminum tariffs are ongoing, describing them as “constructive” but saying they would take time. The official expressed optimism that both sides would be able to resolve the issue in a way that satisfies both the U.S. and EU.

The summit with European Union leaders followed Biden’s participation in a Group of Seven summit in the United Kingdom and a NATO summit in Brussels. He will cap his trip on Wednesday with what is expected to be a contentious meeting with Russian President Vladimir Putin in Geneva.

Updated at 9:53 a.m.