U.S. and EU reach truce in dispute over airline subsidies

Washington and Brussels have agreed to join forces in the face of common threats.

The United States and the European Union have reached a truce in a long-running dispute over airline subsidies.

Washington has agreed, under certain conditions, to suspend for five years duties on Europe that were sanctioned by the World Trade Organization for unfair subsidies to Airbus, which is the largest aircraft manufacturer and a major competitor of U.S. concern Boeing.

This meeting began with a breakthrough in the aviation industry, European Commission President Ursula von der Leyen said Tuesday with U.S. President Joe Biden at the start of official talks. This really opens a new chapter in our relationship, because after 17 years of disputes, we are moving from litigation to cooperation on aviation.

The agreement removes a long-standing trade irritant between the U.S. and Europe, U.S. Trade Representative Catherine Thye told reporters. “Instead of arguing with one of our closest allies, we are finally coming together in the face of a common threat. We have agreed to work together to counter China’s non-market practices in this sector in certain ways that reflect our standards of fair competition,” she said.

Tai added that the agreement is a model that will be used to address other challenges posed by China and non-market economic competition.

European leaders on Tuesday warmly welcomed Biden, who reversed course on relations with the EU after four difficult years under Donald Trump’s presidency, when transatlantic allies faced duties, including on wine and cheese, and criticism over their lack of defense contributions to NATO funding.

“I have a very different position than my predecessor,” Biden noted, posing for an official photo with von der Leyen and European Council President Charles Michel.

“America is back on the world stage,” Michel said. This is great news for allies and for the world.”

Von der Leyen told Biden that his trip to Brussels underscores the “personal approach” in relations with the EU, which is much appreciated in Europe. “The last four years have not been easy,” she noted.

She repeated the last phrase at the beginning of the meeting.

But the transatlantic disputes over steel and aluminum duties have not yet been resolved.

The European Union had previously decided to postpone a planned duty increase by six months in order to work together on the fundamental issue of excess capacity and find a common way forward in dealing with dumping, subsidies and excess capacity from China. “These talks and discussions are ongoing. They are taking place in a very constructive way. It’s going to take some time,” a senior U.S. official told reporters.

In the meantime, it was decided to create a U.S.-EU Council on Trade and Technology.

“The idea is that the United States and Europe laid the foundation for the post-World War II world economy and now need to work together to write the rules of conduct for the next generation, especially in the areas of economics and new technologies,” explained a senior source in the Biden administration.

Washington and Brussels are also launching a dialogue on “Russia, cyber issues and migration,” according to the White House.

Tuesday’s talks also focused on topics such as combating the pandemic coronavirus and climate change.

The U.S. and EU reaffirmed support for the COVAX initiative to ensure equal access to vaccines and to work together to promote global recovery from the economic impact of the pandemic. They also discussed efforts to reform the World Health Organization.

On climate change, the United States and the EU said they will reaffirm their commitment to the 2015 Paris Climate Agreement and aim to become climate-neutral economies by 2050. They have also said that they plan to call on other “major players” to take ambitious measures to combat climate change. The Paris Agreement, to which nearly 200 countries had acceded at the time of signing, aims to slow global warming.