The US and the European Union are on the verge of resolving a long-running trade dispute over Airbus and Boeing subsidies, a move that could improve transatlantic relations as both sides seek to counter China’s growing economic clout.
According to a US official, the US and the European Union will announce a resolution to the dispute over government subsidies for the world’s leading commercial plane makers during a summit in Brussels on Tuesday. A press conference with EU Trade Commissioner Valdis Dombrovskis and US Trade Representative Katherine Tai has been scheduled for 9 a.m. ET.
After years of failed negotiations at the World Trade Organization, there have been signs in recent months that the subsidy dispute may be coming to an end. In March, the United States, the European Union, and the United Kingdom agreed to a four-month suspension of related tariffs worth billions of dollars.
The suspension was a first step toward mending a 17-year-old trade relationship that had been strained by complaints about government support for Airbus (EADSF) and Boeing (BA) (BA).
Boeing was accused of receiving $19 billion in unfair subsidies from federal and state governments by EU authorities in 2004. That year, the US filed a similar complaint against European subsidies to Airbus.
When the Trump administration imposed tariffs on European goods such as Parmesan cheese, French wine, and Scotch and Irish whiskies, the feud became even more heated. In turn, the European Union imposed tariffs on US goods like wine, cheese, and suitcases.
The US and the EU are still working out how to tax big tech companies and a dispute over Trump-era steel and aluminum tariffs, but ending the aircraft subsidy dispute should help improve relations as both sides focus more on countering China.
Over the weekend, the United States joined the United Kingdom, Germany, France, Italy, Japan, and Canada in issuing the Group of Seven’s most vehement condemnation of China in decades. The G7 statement chastised China for alleged human rights violations and political disagreements over Hong Kong, Taiwan, and the South China Sea.
The world’s wealthiest democracies also pushed for a new independent investigation into Covid-19’s origins, as well as a counter-proposal to China’s Belt and Road plan to increase its trading clout.
A senior administration official told CNN that the US and the European Union will announce a joint council later Tuesday to address trade and technology issues, in part to provide a better check on China’s economic practices.
The task force is meant to “work together to write the rules of the road for the next generation, particularly in the areas of economics and emerging technologies,” the official said.
“We also have to take account of the fact that China poses a significant challenge in both of these areas, and dealing with China’s non-market practices, its economic abuses and, of course, efforts to shape the rules of the road on technology for the 21st century will be an important part of the work of this council and this fits with President Biden’s fundamental strategy,” the official said.
On his European tour this week, Biden is eager to repair transatlantic ties, and he hopes to arrive at a high-stakes meeting with Russian President Vladimir Putin on Wednesday looking united with Western allies. The majority of this has come in the form of statements of support, but the resolution of the trade dispute is a clear signal of his desire to normalize traditional US alliances after four years of strain.