U.S. and E.U. End Aviation Trade Spat

· Truce Declared in Fighting for 5 Years

· Transparency in Subsidies

· China Threatens Boeing and Airbus

The United States and Europe on Tuesday, 15 June 2021 agreed to put aside a 17-year dispute over aircraft subsidies for Boeing and Airbus and work together to counter China’s global ambitions to dominate key industries.

The agreement, which suspends the threat of billions of dollars in punitive tariffs on each other’s economies for five years, is a clear sign of President Biden’s seriousness in repairing relations with the European Union and getting the wealthy bloc on his side in what he regards as a generational challenge from the rise of a technologically advanced and autocratic China.

Mr. Biden sees Europe as an ally, not an economic “foe” as former President Donald J. Trump did, and he has pledged to work with the European Union to counter China’s military, economic and technological ambitions. While Mr. Trump also saw the dangers of an unbound China, he did little to try to bring Europe along, instead punishing it with tariffs. Mr. Biden is convinced that, as Asia as a whole grows in population and wealth, the democratic world that believes in the rule of law and multilateral institutions must do more to protect its economies and values.

“Europe is our natural partner, and the reason is, we’re committed to the same democratic norms and institutions, and they are increasingly under attack,” Mr. Biden said during remarks in Brussels.

The agreement means that significant punitive tariffs estimated at $11.5 billion, on a wide variety of products including aircraft parts, wine, tractors, spirits, molasses and cheese, will continue to be suspended after both sides had agreed to do so in March while they tried to settle the dispute. The battle first broke out in 2004, over government subsidies that Europe provides to Airbus.

“The Biden administration is clearly eager to de-escalate tensions with traditional allies while rebuilding a common front with them in getting tougher on China,” said Eswar S. Prasad, the International Monetary Fund’s former China chief. “In tandem with renewed U.S. leadership of the G7, it is becoming evident that the major Western economies are now uniting in their attempts to rein in what they view as unfair Chinese trade and economic practices.”

That will be a delicate task for Europe, which does a large amount of trade with China and does not see Beijing as a peer rival or a military one, as Washington increasingly does. But Europe has also understood that China’s open ambitions under Xi Jinping and its abuse of trading rules abroad and human rights at home make it a much more complex partner.

German officials say they will need time to alter their export-driven economy that is currently so dependent on China, understanding that the Chinese will soon be able to manufacture for themselves some of the sophisticated machine tools they currently buy — and try to copy — from more advanced European firms.

The détente on Airbus and Boeing came as Mr. Biden met top European leaders in a U.S.-E.U. summit that also endorsed a new joint Trade and Technology Council to more formally consult on trade and technical standards. Part of the purpose of the council is to agree on how to limit Chinese digital ambitions in fields like artificial intelligence and cybersecurity and screen Chinese investments in those areas that could have security implications for Europe and the United States.

A senior American official said that the council would operate as an interagency body and coordinate with Brussels in priority areas like standards for artificial intelligence, quantum computing and biotechnology, supply chain resilience and export controls. European officials said its work would probably start with sensitive issues like semiconductors and 5G infrastructure.

The Boeing-Airbus agreement followed two days of intense negotiations in Brussels between Katherine Tai, the U.S. trade representative, and Valdis Dombrovskis, the E.U. trade commissioner. European member states approved the deal overnight.

“This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft — after 17 years of dispute,” said the European Commission president, Ursula von der Leyen.

After the meeting, Mr. Biden flew to Geneva, where he will meet President Vladimir V. Putin of Russia on Wednesday. Mr. Biden will be able to present himself there as the leader of the Western democracies, having first been to summit meetings of the Group of 7, NATO and now the European Union, where he has consulted extensively with allies.

[Understanding on a Cooperative Framework for Large Civil Aircraft]

WTO DG Okonjo-Iweala Welcomes Resolution in US-EU Aircraft Subsidy Disputes

Director-General Ngozi Okonjo-Iweala issued a statement on 15 June in response to the announcement by the European Union and the United States regarding their WTO disputes over subsidies for large civil aircraft.

Statement by DG Okonjo-Iweala

"I am delighted that the European Union and the United States have resolved their dispute over the production of large commercial aircraft. This has been one of the longest running and most taxing disputes in the history of the WTO and the two sides have shown that even the most seemingly intractable differences can be resolved. This agreement proves that with hard work and political will WTO members can achieve historic results."