Boeing-Airbus dispute achieves removal of tariff threats, if not actual resolution

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The Financial Times is among many news sources reporting on the announcement made this week in Brussels that the E.U. and U.S. will end 17 years of litigation over claims and counterclaims that both Boeing and Airbus have received unfair state support in one form or another.

Both sides have won cases at the World Trade Organization (WTO) level. Those wins have resulted the threat of some $11.5 billion in tariffs on E.U.-U.S. trade in both directions.

NBC quoted U.S. Trade Representative Katherine Tai as saying the two sides have come to terms on a five-year agreement to suspend the tariffs at the center of the dispute.

The threat remains that the tariffs could be reimplemented if U.S. companies are not able to “compete fairly” with those in Europe. However, the statement left open quite how that would be prosecuted.

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Boeing-Airbus dispute nearing an end? Maybe not quite

Airbus plane

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Much was made about moving away from litigation, a strategy that has clearly failed to achieve much after 17 years of lawyer fees.

“Today’s announcement resolves a long-standing irritant in the U.S.-EU relationship” Tai said.

“Instead of fighting with one of our closest allies, we are finally coming together against a common threat,” she added, stressing it is time to put aside the fight and focus on China’s economic assertiveness.

That final point underlines a key issue here.

The Biden administration appears to have come to the conclusion that the threat of tariffs and ongoing litigation are a running sore between the U.S. and Europe with little hope of a satisfactory solution.

Much higher on the administration’s agenda is a desire to tackle what it sees as the growing threat from China, both economically and militarily.

Europe has taken some steps of its own from an economic point of view. For example, it has erected tariff barriers. However, it has been slow in confronting China as a collective bloc.

It would seem Biden seized the opportunity to bury the hatchet on the Boeing-Airbus dispute in return for securing a greater level of cooperation to build a global — or, at least, U.S.-E.U. position — on China.

So much for the political objective.

But where does that leave the Boeing-Airbus dispute? Was all the fuss about nothing?

Unanswered questions

The agreement announced in Brussels covers a mere two sides of A4. It leaves most questions unanswered.

No agreement has been reached on what constitutes a “fair level of interest” on state loans. Furthermore, there is no agreement on whether research and development funding awarded by federal agencies on behalf of the Pentagon and NASA constitutes “fair or unfair support.”

All the announcement promises is that the two sides will work to figure it out.

In other words, they’ll resort to negotiation rather than litigation.

The dispute has essentially moved from being confrontational, fought legally to a process of negotiation and possibly, in time, mutual compromise. Crucially for businesses on both sides of the Atlantic, it at least removes, for now, the threat of tariffs and disruption to supply chains and livelihoods.

For that, at least it’s a step forward.

If it’s not the end, then maybe the beginning of the end of this long-running farce.

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