(BRUSSELS) – The EU and the US agreed to end the Boeing-Airbus trade dispute Tuesday, suspending tariffs worth USD 11.5 billion, and paving the way to resolving the longest trade dispute in the history of the WTO.
The understanding relating to large civil aircraft transforms almost 17 years of disputes into what the two sides term a ‘forward-looking, collaborative platform to address bilateral issues as well as global challenges’.
Both sides say they will now seek to overcome long-standing differences in order to avoid future litigation and preserve a level playing field between the two giant aircraft manufacturers and prevent new differences from arising.
The two sides have agreed to collaborate on jointly analysing and addressing non-market practices of third parties that may harm our large civil aircraft sectors.
“Today, with the agreement on Boeing-Airbus, we have taken a major step in resolving the longest trade dispute in the history of the WTO.” said EC president Ursula von der Leyen: “I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed.”
The dispute has affected business in both trade blocs. US countermeasures in the Airbus case affected 19 different product categories, including aircraft, wines and spirits, dairy and cheese or machinery, in a value of USD 7.5 billion. Tariffs were 15% on aircraft and 25% non-aircraft products, and led to some USD 2.2 billion in duties paid by US importers.
EU countermeasures in the Boeing case affected 130 different product categories, including aircraft, nuts, tobacco, spirits, handbags or tractors, in a value of USD 4 billion. Tariffs were 15% on aircraft and 25% non-aircraft products, and led to some USD 1.1 billion in duties paid by EU importers.
Under the Understanding on a cooperative framework for Large Civil Aircraft, the two sides expressed their intention to:
- establish a Working Group on Large Civil Aircraft led by each side’s respective Minister responsible for Trade,
- provide financing to large civil aircraft producers on market terms,
- provide R&D funding through an open and transparent process and make the results of fully government funded R&D widely available, to the extent permitted by law,
- not to provide R&D funding as well as specific support (such as specific tax breaks) to their own producers that would harm the other side,
- collaborate on addressing non-market practices of third parties that may harm their respective large civil aircraft industries,
- continue to suspend application of their countermeasures, for a period of 5 years, avoiding billions of euros in duties for importers on both sides of the Atlantic.
The European Union and the United States dispute on Large Civil Aircraft (LCA; also known as Airbus-Boeing Dispute) is the longest running dispute in the history of the World Trade Organisation (WTO).
It started in 2004, when the US filed a case at the WTO against the EU, arguing that the bloc was illegally subsidising the European Large Civil Aircraft (LCA) manufacturer Airbus. The EU also filed a complaint against the US in May 2005, for its unlawful support to Boeing.
Following WTO decisions, both the US (in October 2019) and the EU (in November 2020) imposed punitive tariffs on each other’s exports, affecting in total a value of 11.5 billion dollars of trade between the two sides. As a result, EU and US businesses have had to pay over 3.3 billion dollars in duties.
