airplane aircraft

European Union and United States representatives are expected to announce a suspension of tariffs related to a long-running dispute over subsidies given to aircraft manufacturers Airbus and Boeing, allowing them to focus on countering China’s growing commercial aircraft industry.

Insiders told Reuters that the EU and US are likely to announce a five-year suspension of the 17-year-old dispute.

The move would grant relief to dozens of other industries affected by tit-for-tat tariffs, which, although suspended in March, are due to renew on 11th July.

Both the European Commission, responsible for EU matters related to trade, and the US have been driven to find a solution by that date, although this has proven difficult, as nearly two decades of legal back and forth and thousands of pages of documents bog down efforts for a permanent resolution.

The disagreement dates to 2004, when the US withdrew from a 1992 aircraft subsidy pact and took the EU to the WTO, claiming Airbus had managed to equal Boeing’s share of the jet market thanks in part to subsidised government loans.

The EU counter-sued over what it termed unfair R&D support and subsidised tax incentives for Boeing.

Both parties won partial victories in 2019, leading to tariffs on trade of goods worth some €9.5 billion.

Freezing the disagreement now seems to be the more practical solution, pushing back the resumption of tariffs by years, and allowing both parties to focus on China’s nascent aerospace industry, supported by its state-driven economic model.

The matter was discussed during US Trade Representative Katherine Tai’s first face-to-face meeting with EU counterpart Valdis Dombrovskis.

In May, Ms Tai told reporters that she was optimistic about reaching a deal with Brussels, adding that the two sides needed to look at “the bigger question” of China’s ambitions to become a global player in the commercial aircraft industry.

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