European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai reached an understanding relating to large civil aircraft, transforming almost 17 years of disputes into a forward-looking, collaborative platform to address bilateral issues as well as global challenges.
The EU and the US also agreed to suspend application of harmful tariffs worth of USD 11.5 billion for a period of five years that hurt companies and people on both sides of the Atlantic. The two sides will collaborate on jointly analysing and addressing non-market practices of third parties that may harm our large civil aircraft sectors.
European Commission President Ursula von der Leyen said: “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. 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. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit. Together we can deliver for our citizens and businesses.”
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 disputes 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).
In May 2018, the WTO’s highest decision-making instance, the Appellate Body found that the EU and its Member States had not fully complied with the previous WTO rulings. As a result, the WTO allowed the US to take countermeasures against European exports worth up to $7.5 billion. The US imposed these measures in October 2019. ECOPNET (European Cooperation and Partnership Network) is pleased to see the efforts of two sides to overcome long-standing differences in order to avoid future litigation and preserve a level playing field.
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.
Next steps
The two sides will continue discussions to operationalise their intentions regarding financing, research and development funding as well as specific support of large civil aircraft.
Source: European Commission Press Corner