On June 15, 2021, in the city of Brussels, the United States (US) and the European Union (EU) have agreed to a truce after a 17-year conflict over aircraft subsidies. Since 2004, Boeing and rival Airbus have argued at the World Trade Organization (WTO) about unfair competition. Government representatives on both sides agreed to suspend tariffs for five years while working on an agreement on aircraft subsidies.
What does this truce mean? Both the EU and the US seek to overcome long-standing differences to avoid future litigation and preserve a level playing field between aircraft manufacturers and prevent new differences from arising. The truce is expected to produce a positive effort to calm trade relations between the U.S. and the EU, which can improve transatlantic trade relations and create more positive tariffs. The agreement, in part, will suspend harmful tariffs such as those imposed worth $11.5 billion USD, which hurt companies and people on both sides. The deal will resolve a long-standing irritant with the U.S. and European relationships, as it will move the air industry from litigation status to one of cooperation.
As an example, exports from the US to Europe in the Boeing case affected an estimated 130 different product categories. In part, it included: aircraft, nuts, tobacco, whiskey, molasses, motorcycles, handbags, and tractors at an estimated $4 billion USD. Tariffs were 15% on aircraft and 25% non-aircraft products which led to $1.1 billion USD in duty payments made by EU importers.
Both the U.S. and Europeans believe that five years is sufficient time to build trust and confidence and put the dispute to rest and as well to work collaboratively on other mutual areas of interest. Both sides will work jointly analyzing and addressing non-market practices of third parties that may harm their large civil aircraft sectors.
Please contact your Western Overseas representative if you have any questions.