Airbus / Boeing deal explained. What’s in it և What will happen next?

The end of the EU-US uninterrupted struggle over the subsidies of the planes that were wrecked in Brussels for smashing sea bass և lamb stew, which means a big ceasefire Resolving trade conflict,

For policymakers in Brussels, the hope is the Airbus-Boeing deal, which is resolutely turning the page on trade tensions during the Trump era. For businesses on both sides of the Atlantic, it is raising the range of punitive tariffs on Georgian cheese with Georgian cane molasses out of aviation.

But: deal:Tuesday’s EU-US summit also marks a long process that requires close co-operation if both sides are to turn a blind eye to each other and focus on China’s reciprocal trade challenges.

What was the dispute about?

It dates back to 2004, when Airbus first delivered more aircraft than its American rival. The previous notion of subsidies collapsed. The US administration accused him of unjust state aid. The EU countered with its own complaint. The World Trade Organization has launched an investigation into both sides.

The main criticism of the United States was the so-called initial assistance provided to Airbus by the host countries of the EU (then the United Kingdom, France, Germany and Spain). The aid has raised government funding for new models that are offset by future sales royalties.

The EU responded that Boeing had won US support for violating WTO rules, including tax breaks in Washington, D.C., where the company is based. Disputes began over disputes, with each side accusing the other (successfully) of failing to comply with WTO rulings.

In 2019, the WTO granted the United States the right to slap $ 7.5 billion in retaliatory tariffs on European goods. The US hit list ranged from French wine to German machines.

The following year, the EU was allowed to add more Tariffs: worth nearly $ 4 billion in US goods. An eclectic hit list like this ranged from ghosts to ornamental fish.

The end of the dispute only became a serious possibility with the advent of the Biden administration, with the growing awareness that it was hurting companies on both sides, while at the same time helping China’s ambitions in the commercial civil aviation market.

In March, the two sides agreed suspend their response rates for four months, creating a window of negotiations.

What’s in the deal?

Its main element is the five-year suspension of punitive tariffs – the creation of a working group, which aims to get a final idea of ​​the past – future subsidies.

Welcoming the deal, Boeing said it was “committed to resolving the launch aid to the EU, leaving the necessary rules to ensure that the EU and the US adhere to that commitment without further action by the WTO”.

Share price chart reissued to show performance of Boeing և Airbus shares

Still, some WHO rules will be used to set WHO standards for research, research funding, tax breaks, and other types of grants. The deal also calls for regular ministerial contacts, mainly between EU Trade Commissioner Valdis Dombrovskis and US Trade Representative Catherine Thai, to monitor progress.

It is possible that both sides agreed to cooperate in the operation of applicants in the civil aviation market “non-market economy”. In a statement, US President Biden directly linked it to “China’s non-market experience in this area, which gives Chinese companies an unfair advantage”.

What are the consequences for the aviation sector?

Welcome help. The field has been Maximum shot by Covid-19The prospect of a trade war would be an additional costly diversion. Aircraft deliveries remain below pre-epidemic levels as airlines canceled or delayed cash orders.

Airbus և Boeing officials also recently announced that they want a settlement. In addition to the coronavirus, their long-standing monopoly faces growing competition from China, where state-owned aerospace manufacturer Comac is developing the C919, which is designed to compete with the Airbus A320 and the Boeing 737.

Boeing forecast Last year, China became the world’s largest aviation market, with about 25 percent of the world’s aviation growth coming from the Asian country over the past decade.

“I am very confident that we have resolved these disputes,” Ty said on Tuesday. “We are putting our case portfolios.”

Where does the deal leave the EU-US trade?

That concludes a long-running source of controversy. Now Brussels is trying to make progress on another issue. Trump-era tariffs for steel: aluminum.

They have hurt EU producers, leading to a wave of EU-specific retaliation against US consumer goods such as Harley-Davidsons and bourbon. Biden և EU leaders agreed on Tuesday to set up a working group on the issue.

Chart of EU trade balance with the US by commodity group (€ billion), showing the EU surplus by sector

This is a particularly bitter dispute for the EU, as the Trump administration justified the move by calling the EU a threat to national security, alongside other traditional allies like Canada. But until Canada was later postponed by Trump as part of a renewed trade agreement, there was no help for the EU.

EU officials say the bloc is now taking a two-pronged approach to ending the dispute while pushing for a positive agenda. To this end, Biden and EU leaders agreed to set up a “trade technology council” to work together to set rules for emerging industries, to set technical standards such as artificial intelligence, and sensitive technologies such as semiconductors.

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