EU and US agree truce after 17-year trade feud 


The US and the EU have agreed a truce after a 17-year trade row over Boeing and Airbus subsidies that has affected goods from cashmere jumpers to parmesan cheese.

Arch-rivals Airbus, which is part-owned by the French, Spanish and German governments, and American Boeing are the world’s two biggest aircraft manufacturers.

But a bitter feud, which started in 2004 and is the longest dispute in World Trade Organisation (WTO) history, has seen the US and EU claim the other’s plane maker has received unfair state support. 

Arch-rivals Airbus, which is part-owned by the French, Spanish and German governments, and American Boeing are the world’s two biggest aircraft manufacturers

The row has seen £8.2billion of levies slapped on items including Scotch whisky, Spanish olives and American exercise bikes in a tit-for-tat trade war.

But a breakthrough has finally been reached at a US-EU summit following two days of talks in Brussels.

It means that a four-month suspension of tariffs that started in March will be extended for five years, buying time to settle the matter for good.

The truce is an early win for President Joe Biden who is keen to nurture a closer relationship with other Western countries as he takes on the might of Russia and China. 

It also represents a significant shift from former President Donald Trump’s enthusiasm for a trade war.

US trade representative Katherine Tai said the truce ‘resolves a long-standing trade irritant’.

Airbus said it ‘will provide the basis to create a level-playing field which we have advocated for since the start’.

The UK was embroiled in the saga until it left the EU – at which point it dropped its tariffs against the US.

Britain was a party to the talks as a former EU member and manufacturer of key Airbus components, as the company makes its wings in the UK.

The US only responded in kind this week.

The trade spat dates back to 2004, when the US claimed the EU had supported Airbus with £15.6billion in illegal subsidised loans to help it build aircraft.

The EU countered, alleging Boeing had received ‘trade-distorting’ subsidies worth £16.3billion. 

WTO officials have ruled several times over the years that both sides have unfairly aided the companies.

In 2019, the Geneva-based organisation said the US could impose tariffs on up to £5.3billion of EU goods, and in 2020 then said the EU could do the same on £2.8billion of goods.

The US later imposed additional levies, while Brussels drew up a mammoth retaliation plan.

Valdis Dombrovskis, European Commission executive vice-president, said: ‘With this agreement, we are grounding the Airbus-Boeing dispute.

‘It proves that the transatlantic relationship is now moving to the next level, and that we can work with the US on tackling long-running disputes.

‘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.’ 

The progress comes as Airbus and Boeing fight for survival amid the Covid crisis, which has battered global air travel.

Airbus lost £950million last year after the number of planes it handed over to airlines fell more than a third to 566.

Commercial jet arm sales fell by 37 per cent – and total sales fell by 29 per cent to £43.3billion because turnover rose in its space and defence divisions.

Although Airbus is a European company, it employs 14,000 people in the UK.

As part of a huge restructuring to cut 15,000 of its 135,000-strong global workforce, it is letting go of 1,700 British employees.

Boeing was already in the middle of a crisis surrounding its 737 Max jets.

The worldwide fleet of best-selling planes has been grounded since March 2019 after the second of two deadly crashes which killed 346 people and were caused by a software fault.

US politicians later described the planes as ‘flying coffins’. It is cutting around 30,000 jobs from a 160,000-strong workforce.

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