The EU and US have Reached an Agreement to Halt the Boeing-Airbus Trade Dispute

The United States and the European Union have agreed to settle their 17-year dispute over aviation subsidies to Airbus SE and Boeing Co., which saw the allies levy tariffs on each other’s exports worth $11.5 billion.

The European Commission spent Monday night debating the agreement with member states in order to get the deal done before President Joe Biden’s EU-US conference in Brussels. The historic agreement puts an end to one of the most contentious aspects of former President Donald Trump’s trade fight and ushers in a new era of transatlantic collaboration on state aid at a time when China is striving to displace the Boeing-Airbus civil aircraft duopoly.

The deal was prompted in part by a growing understanding among policymakers in Brussels and Washington that China’s state-owned aircraft company, Commercial Aircraft Corp. of China, or Comac, is on track to become a serious global competitor by the end of the decade.

The US was granted authority by the World Trade Organization in 2019 to levy duties on $7.5 billion of EU exports annually for government backing for Airbus, while the EU was granted authority to levy tariffs on $4 billion of US goods.

In March, both sides agreed to delay the taxes while they worked on a deal. They encompass a wide range of products, including aeroplanes and components, tractors, wine, and cheese. As part of its exit from the EU, the United Kingdom unilaterally abolished tariffs with the United States in December.

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