Airbus and Boeing celebrate a truce in trade disputes between the US and Europe

US and European Union governments ended a dispute over subsidies that started in 2004 and now promise a new phase of transparency and financing with market rules

The dispute between Boeing and Airbus over illegal subsidy charges that has been going on in court since 2004 has won a five-year truce, US and EU trade representatives announced on Tuesday.

The agreement signed with the presence of President Joe Biden, the President of the European Council, Charles Michel, and the President of the European Commission, Ursula von der Leyen, ended the application of compensation tariffs for both of them for a period of five years.

These tariffs had been authorized by the WTO during the Trump administration, which made relations between the countries worsen.

Now, the US and the European Union promise to establish new rules for financing commercial aircraft orders in a transparent manner and following market rules.

Complaints on both sides involve accusations of subsidized interest-rate financing to Airbus and Boeing customers as a way to secure bulky orders in recent decades.

“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,” said Valdis Dombrovskis, European Commission Executive Vice-President.

C919 uses CFM LEAP-1C engines (Xinhua)

Fear of China’s advance

Airframers celebrated the announcement of the agreement. Airbus stated that the agreement “will provide the basis to create a level-playing field which we have advocated for since the start of this dispute.”

“It will also avoid lose-lose tariffs that are only adding to the many challenges that our industry faces,” the airframer added.

“Boeing welcomes the agreement by Airbus and the European Union that all future government support for the development or production of commercial aircraft must be provided on market terms. The understanding reached today commits the EU to addressing the launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action. Boeing will fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected,” said the statement published by the US company.

Behind the understanding between the two Western powers is China’s advance in the air travel segment. The U.S Trade Representative Katherine Tai reinforced that the agreement intends to contain the investment in aircrafts by “non-market actors”, that is, the Chinese nation, which today develops three commercial models.

The ARJ-21, CR929 and C919 jets are developed with heavy state investments and the goal of filling most of the commercial aircraft orders in China, reducing the chances of similar aircraft from Airbus and Boeing.

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