U.S. & E.U. reach deal to end dispute over subsidies to airline manufacturers
Come check out our blog to learn more about the US and the EU's decision to end their long-running feud over subsidies to rival plane makers Airbus and Boeing.
The US and the European Union (EU) have finally reached an agreement to settle the dispute over subsidies to rival plane makers Boeing and Airbus, as well as to phase out the billions of dollars in tit for tat tariffs. The most recent example was when the US imposed tariffs on EU exports worth $7.5 billion in 2019 in response to a WTO ruling against EU subsidies on Airbus and the EU retaliated with $4 billion in duties in response to another WTO ruling against US subsidies on Boeing.
The trade dispute has been raging since 2004, and it is the longest-running dispute between the two. This 17-year dispute is about what both sides consider unfair and fair subsidies for their respective aircraft manufacturers: America's Boeing and Europe's Airbus.
Over the years, the WTO has found both parties guilty, giving them an excuse to impose duties on unrelated industries such as French winemakers, German cookie bakers in Europe, spirits producers in the US, and more.
Fortunately, soon after US President Biden took office, both parties agreed to suspend tariffs. The suspension went into effect on March 11 and lasted four months, giving both sides the time they needed to reach an agreement. The agreement took effect on July 11th and will put tariffs on hold for five years.
The deal is significant for both Airbus and Boeing. Although the companies dominate the global airplane market, they have faced declining orders, especially after the pandemic halted air travel.
The agreement is also essential as the two face competition from Chinese manufacturers, which have heavy government support. China has successfully forced technology transfers from western manufacturers to its companies and pressed local airlines to buy Chinese planes. The deal will allow the US and EU to counter China's standard game plan, as the two plan to work together and take joint action against these unfair trade practices by the Chinese government that appear to give Chinese plane manufacturers huge advantages.
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