The EU’s trade commissioner has said he is increasingly hopeful of securing a deal with the Biden administration to end a 16-year feud over subsidies for Airbus and Boeing, in what would be a breakthrough in transatlantic trade relations.
Valdis Dombrovskis told the Financial Times that the EU and US were engaging “very intensively” on resolving their trade disputes, as he hailed a “very welcome shift” since Joe Biden’s administration took office in January.
The discussions on aircraft subsidies are a particular point of focus, given the shared desire in Brussels and Washington to end a dispute that during the past two years has led each side to hit the other with punitive tariffs on trade worth billions of dollars.
Those duties — on a wide range of products from French wine to US sugar molasses — are currently suspended after the EU and US agreed in March to lift them for four months, creating the political space for negotiations.
“The work is ongoing and I think there are reasons to expect we will be able to resolve this issue, and that we will not have to return to this mutual imposition of tariffs,” Dombrovskis said.
Dombrovskis said the two sides were working on new rules, known as disciplines, on future subsidy arrangements for the airline sector. Asked whether the talks could achieve success within the four-month window announced on March 5, the commissioner said: “We are currently working with this timeline in mind.”
The dispute is one of the longest-running cases in the history of the World Trade Organization. Both sides have been found over the years to have failed to properly implement WTO panel rulings on illegal subsidies.
Valdis Dombrovskis: ‘The work is ongoing and I think there are reasons to expect we will be able to resolve this issue’ © Francisco Seco/Pool/Reuters
Its consequences have become increasingly tangible in recent years, with the US hitting European exports worth $7.5bn with extra tariffs in October 2019, while the EU imposed additional duties on $4bn of US exports the following year. Both sets of measures were in line with WTO rulings in favour of each side.
“I do hope we will be able to solve it and put it behind us,” Dombrovskis said.
Brussels has proposed to the US a broader suspension of punitive tariffs lasting six months — a move that would cover duties linked to Trump-era tariff increases on imported steel and aluminium. The suggestion has so far not been picked up by Washington.
Dombrovskis said the EU was seeking the suspension for the steel and aluminium tariffs so as to jointly “address the root cause of the problem, which is global steel overcapacity”, notably resulting from Chinese production.
“So far we are awaiting concrete reactions . . . on this proposal,” Dombrovskis said. “From our point of view that would be the best solution.”
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He said co-operation with the new US administration, including its trade representative Katherine Tai, was increasing on subjects including reform of WTO and how to address the “challenges posed by the socio-economic model of China”.
Brussels has also submitted proposals to the US for the creation of a Trade and Technology Council to develop standards in cutting-edge areas such as artificial intelligence.
“I would say that first reactions . . . are broadly speaking positive,” Dombrovskis said. “We are waiting also for more specific reactions from the US. [We’re] ready to discuss and find a solution which fits both sides.”
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