The U.S. and the European Union (EU) are suspending tariffs on certain goods for five years in an agreement that marks the end of a long dispute involving plane makers Boeing and Airbus, U.S. trade representative Katherine Tai announced Tuesday, according to the Associated Press.
Tai said that tariffs could return if companies in the U.S. cannot "compete fairly" with Europe. The U.S. placed tariffs, that could have totaled to $7.5 billion, on European goods after the World Trade Organization (WTO) found that the EU failed to comply with its ruling on government subsidies for Airbus in 2019. The EU fired back with $4 billion in punitive duties in November 2020 after the WTO found that the U.S. gave illegal subsidies to Boeing.
"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."
U.S. President Joe Biden and the EU formerly agreed to suspend the tariffs in March and the new agreement takes effect July 11.
For more reporting from the Associated Press, see below.
The U.S. and the EU's deal Tuesday will phase out billions of dollars in punitive tariffs, the U.S. trade envoy said.
Tai's comments came as Biden met with EU leaders in Brussels.
The trade dispute skyrocketed under the Trump administration, and saw tit-for-tat duties slapped on a range of companies that have nothing to do with aircraft production, from French winemakers to German cookie bakers in Europe and U.S. spirits producers in the United States, among many others.
The agreed prior suspension started on March 11 for four months.
"This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft—after 17 years of dispute," said European Commission President Ursula von der Leyen.
Both sides said they would also work together to analyze and address the "non-market practices of third parties that may harm our large civil aircraft sectors," according to the EU's executive branch.
Tai said they would cooperate "to challenge and counter China's non-market practices in this sector in specific ways that reflect our standards for fair competition. "
Airbus, which is headquartered in France but also has centers in Germany and Spain, welcomed the agreement.
"This will provide the basis to create a level playing field which we have advocated for since the start of this dispute. It will also avoid lose-lose tariffs that are only adding to the many challenges that our industry faces," an Airbus spokesperson said in a statement.
France's finance and European affairs ministers also hailed the deal.
"We are now going to be able to focus on finally putting these differences behind us, and to define the conditions for fair competition on a global scale to support the aerospace sector, which is strategic for both Europe and the United States," they said in a joint statement.
Despite the breakthrough, the deal does not end the Trump-era trans-Atlantic trade row. The former U.S. president also slapped duties on EU steel and aluminum. That move enraged European countries, most of them NATO allies, because it was justified as a measure to protect U.S. national security.
The so-called Article 232 proceeding hurts European producers and raises the cost of steel for American companies. The EU retaliated by raising tariffs on products like U.S.-made motorcycles, bourbon, peanut butter and jeans.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
