On June 15, 2021, the White House announced that the US and European Union (EU) have reached an agreement in the 16-year WTO Boeing-Airbus dispute and agreed to address shared challenges from China. The US and EU will suspend tariffs that were authorized by the WTO that are related to this dispute for five years and work together to challenge and counter China’s non-market practices in this sector in specific ways that reflect standards for fair competition. This includes collaboration on inward and outbound investment and tech transfer.
A White House Fact Sheet and a USTR press briefing said both sides agreed to the following general principles to guide their future cooperation.
White House Fact Sheet:
Suspend the tariffs related to this dispute for five years. This signals a mutual determination to embark on a fresh start in the relationship. The agreement also retains flexibility for the United States to reapply tariffs if the US believes it is no longer competing on a level playing field. [These tariffs will remain suspended so long as EU support for Airbus is consistent with the terms of this agreement. Should EU support cross a red line and U.S. producers are not able to compete fairly and on a level playing field, the United States retains the flexibility to reactivate the tariffs that are being suspended.]
Establish a Working Group to analyze and overcome any disagreements that may arise between the sides. The Working Group will collaborate on and continue discussing and developing these principles and appropriate actions. The Trade Ministers leading the Working Group will consult at least yearly. The Working Group will meet on request or at least every 6 months.
Ensure that US workers and industries can compete on a level playing field. The US and EU agreed to clear statements on acceptable support for large civil aircraft producers that affirm the outcomes of the disputes and the intention of the parties to ensure that US workers and industries can compete on a level playing field.
Confront the threat the US and EU face from China’s ambitions to build a sector upon non-market practices, including:
- Meaningful cooperation on countering (1) investments in the EU and the United States by non-market actors, which can lead to the appropriation of technology; and (2) outward investments into China that are influenced by non-market forces.
- Identifying where joint work is needed to take parallel action against non-market practices.
- Sharing information regarding these and other areas to forge a common approach in the large civil aircraft sector.
EU press release:
On 15 June 2021, the European Commission announced that 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.
Both sides will now seek to overcome long-standing differences in order to avoid future litigation and preserve a level playing field between our aircraft manufacturers and will also work to prevent new differences from arising.
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.
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
