Thursday, July 29, 2021

Truce between the European Union and the United States on a seventeen-year-old conflict between Airbus and Boeing

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It is not yet peace, but it is already no longer war! The European Union and the United States announced, Tuesday, June 15, a truce of five years in the long trade dispute, more than seventeen years old, which opposes them on the subject of the subsidies received by Boeing and Airbus. This long-lasting break in this never-ending conflict comes as US President Joe Biden begins an official visit to Europe. Originally, the bracketing of the trade dispute was to last five months and end in July. It is therefore a few weeks before this deadline that the two parties have decided to lay down their arms for at least five years. The time to negotiate a formal agreement that will put a definitive end to a conflict that no one wanted anymore.

Read our editorial: Airbus-Boeing: a sterile conflict

Thus, Boeing, yet at the origin of the dispute, welcomed the cessation of hostilities. The American group believes that in the future “Any future government support for the development or production of commercial aircraft must be provided on market terms”. For its part, Airbus also welcomed the agreement. The European aircraft manufacturer considers that “This will provide the basis for creating the level playing field that we have been advocating from the start of this dispute. It will also avoid those fruitless bickering which only adds to the many challenges our industry faces ”.

Fifteen years of proceedings at the WTO

It was in 2004 that the trade dispute between Boeing and Airbus began. That year, the United States, under pressure from the American aircraft manufacturer, filed a complaint before the WTO to contest the billions of euros in subsidies that Airbus took advantage of to develop certain programs and in particular its super jumbo A380. The day after the filing of the American complaint, it was the European Union’s turn to challenge before the WTO the billions of dollars in tax credits from which Boeing benefits to develop and produce its planes.

Curiously, while there is only a twenty-four hour gap between the American approach and the European response, the WTO will take more than six months to start the investigation of the EU complaint. For fifteen years, the examination of this trade conflict by the WTO will be done slowly, at the rate of WTO procedures. The arrival of Donald Trump in the Oval Office will precipitate events.

Read the column: “Airbus and Boeing excel in the endless goatee game”

In October 2019, the WTO authorized the United States to overtax European products for 7.5 billion dollars (6.18 billion euros). The American authorities then roll out a Prévert-style list of products from the Old Continent whose customs tariffs are, like the Airbus, raised by 10%. In October 2020, the EU was authorized to overtax US exports for $ 4 billion.

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