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U.S. and EU reach deal to end damaging Airbus-Boeing dispute

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The United States and the European Union reached a deal Tuesday to end a damaging dispute over subsidies to rival plane makers Boeing and Airbus and phase out billions of dollars in punitive tariffs, the U.S. trade envoy said.

U.S. Trade Representative Katherine Tai said the two sides have come to terms on a five-year agreement to suspend the tariffs at the center of the dispute. She said they could be re-implemented if the U.S. companies are not able to “compete fairly” with those in Europe.

“Today’s announcement resolves a long-standing irritant in the U.S.-EU relationship,” Tai said, as President Joe Biden met with EU leaders in Brussels. “Instead of fighting with one of our closest allies, we are finally coming together against a common threat.”

The dispute 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.

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The U.S. imposed $7.5 billion in tariffs on European exports in 2019 after the World Trade Organization ruled that the EU had not complied with its rulings on subsidies for Airbus, which is based in France. The EU retaliated last November with $4 billion in punitive duties after the WTO ruled that the U.S. had provided illegal subsidies to Boeing.

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Which companies could benefit

In March, weeks after Biden had taken office, the two sides agreed to suspend the tariffs.

“The U.S. tariffs hit a range of EU goods, including food, beverage/wine, machinery items as well as aircraft and aircraft parts,” Height Securities Benjamin Salisbury told investors in a note. “Meanwhile, the EU tariffs hit Boeing jets as well as industrial and agriculture products — including fish, cheese, spirits, tractors — from the U.S.”

A range of major American companies stand to benefit from the tariff suspension, including Caterpillar, Constellation Brands, The Hershey Company, John Deere, Kraft Heinz and Ocean Spray, he said.

“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. “It is the longest trade dispute in the history of the WTO.”

The breakthrough still leaves other trade frictions between the U.S. and the EU unresolved. Most prominently, the import taxes that President Donald Trump imposed on European steel and aluminum three years ago have been left in place by President Joe Biden. Whether progress on that vexing issue can be resolved soon remains unclear.

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