The deal the United States and the European Union reached Tuesday to end their long-running rift over subsidies to Boeing and Airbus will suspend billions in punitive tariffs. It will ease trans-Atlantic tensions. And it will let the two sides focus on a common economic threat: China. But the breakthrough still leaves some trade friction between the U.S. and the EU unresolved. Most prominently, President Biden kept in place import taxes that President Donald Trump imposed on European steel and aluminum, a move that infuriated some of America’s closest allies three years ago.
For now, Tuesday’s truce in the Boeing-Airbus dispute goes a long way toward repairing a huge commercial relationship — $933 billion in two-way trade last year despite the pandemic — that came under enormous strain during the Trump years. Among other things, the former president angrily charged the Europeans with using unfair trade practices to sell more products to the United States than they bought and of shirking their responsibility to pay for their own national defense. The deal might help solidify the duopoly of Airbus and Boeing, which together dominate the global market for airline jets. Both companies have struggled recently with declining orders and deliveries at a time when the pandemic devastated air travel and led airlines to cancel or delay purchases.
Tuesday’s agreement made clear that the United States and the EU recognize that Boeing and Airbus face an external threat far bigger than each other: As part of its aggressive drive to become the world’s dominant industrial power, China is intent on developing its own plane-making industry with heavy government support. The U.S. and EU have agreed to work together to counter Beijing’s efforts to obtain foreign aviation technology. They plan to take joint action against unfair trade practices that appear intended to give Chinese plane manufacturers unfair advantages.
Richard Aboulafia, an aerospace analyst with Teal Group, suggested that the agreement will help the U.S. and Europe pivot to present a united front against China. He noted that Chinese airlines delayed deliveries from Boeing and Airbus during the pandemic but continued to take deliveries from China’s own aircraft manufacturer, COMAC.
The U.S.-EU agreement won’t stop China from doing that, he predicted, “but at least they can prevent a scenario where China divides the West and plays the U.S. and its allies off against each other.”
In another sign of a trans-Atlantic reconciliation, the Group of Seven wealthy countries, including France, Germany, Italy, and the United Kingdom, agreed this month to a Biden administration proposal for a 15% global minimum tax on the earnings of multinational corporations.
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