Key facts
- The five-year truce suspending tariffs in the Airbus-Boeing subsidy dispute expires on July 11.
- The US and EU are in discussions to extend the truce, which affects $11.5 billion in trade.
- The World Trade Organization previously authorized retaliatory tariffs for both sides in the dispute.
- MEP Bernd Lange expressed concern that the dispute's renewal could strain EU-US relations.
- The US may impose tariffs under Section 301 of the Trade Act of 1974 if the truce is not extended.
The United States and the European Union are approaching a deadline to decide the fate of a five-year truce that suspended tariffs related to their long-running dispute over aircraft subsidies. The truce, which expires on July 11, affects $11.5 billion of goods and could be allowed to lapse, potentially leading to the reimposition of tariffs.
The dispute dates back to 2004 when both sides lodged cases at the World Trade Organization, accusing each other of providing unfair subsidies to their respective aircraft manufacturers, Boeing and Airbus. In 2019 and 2020, the WTO authorized the US and EU, respectively, to impose retaliatory tariffs on billions of dollars worth of goods. However, in 2021, both parties agreed to suspend these measures for five years, aiming for a broader resolution.
Discussions are currently underway between the EU and the US to extend this suspension. A European Commission spokesperson confirmed that talks are ongoing to maintain stability. However, concerns have been raised by German MEP Bernd Lange, chair of the European Parliament's trade committee, that the end of the truce could reignite broader EU-US tensions. He fears this could jeopardize the Turnberry Agreement, a deal aimed at maintaining stability and preventing retaliatory measures, which is nearing approval by EU lawmakers.
The US Trade Representative's office has indicated that a decision regarding potential actions in WTO disputes involving large civil aircraft may be made in July. Such actions could include imposing tariffs under Section 301 of the Trade Act of 1974, a move that could escalate the trade friction.