US and EU set to set a 17-year old dispute over aircraft subsidies

The United States and European Union are on the verge of ending their 17-year old conflict over aircraft subsidies to Aircraft SE and Boeing Co. that saw allies impose punitive tariffs on $11.5 billion of each other’s exports.

The trade dispute has existed since 2004 in parallel cases at the World Trade Organization (WTO) over subsidies for American planemaker Boeing and European rival Airbus.

The President of European Commission Ursula von der Leyen said in a news conference on Tuesday, “I am very positive that we will find an agreement on the Airbus-Boeing issue today, in our conversation with our American friends.” She continued, “I am very positive and convinced that we will deliver together today.”

According to people familiar with the matter, the European Commission had a discussion on the night of June 14 about the accord with member states getting the deal over the line before an EU-US summit with US President Joe Biden in Brussels. Governments of Airbus’ three EU home countries (Germany, France and Spain) were consulted on the draft deal ahead of it being confirmed on Tuesday.

The deal will be a five-year accord and suspend punitive tariffs linked to the disagreement, coupled with the creation of a working group and ministerial dialogue on subsidy limits, according to the people familiar with the talks as reported by Financial Times.

The landmark agreement sets a new-era stage for transatlantic cooperation over state aid. It is driven in part by creating an awareness among policy makers about China’s nascent commercial aircraft industry since it is on the way to become a legitimate competitor in global planemaking by the end of the decade.

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