United States and European Union suspend the duty on Boeing (BA) and Airbus aircraft for five years

With a 5-year deal to eliminate bilateral duties on The Boeing Company (BA) and Airbus aircraft, the US and EU achieved a “breakthrough in aviation” and improved trade relations. However, since 2004, the European Airbus and American Boeing have been arguing over the fairness of their subsidy policies at the World Trade Organization (WTO).

Following a WTO ruling that the EU unfairly subsidized Airbus, the Trump administration imposed tariffs on European goods worth $ 7.5 billion. Afterward, the EU imposed import duties of $ 4 billion on US goods following another WTO ruling alleging that Boeing had received illegal aid. However, according to a long-term agreement announced Tuesday, Joe Biden’s government aims to re-establish cooperation between countries as aviation allies seeking mutually beneficial trade relationships.

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In a meeting with Biden at the US-EU summit, European Commission leader Ursula von der Leyen called the deal “a new chapter in our relationship after 17 years of disputes.” The new Aircraft Working Group has “now allowed both sides to deliver a lasting solution” while slashing tariffs for importers on both sides of the pond by billions of euros. ”

According to US Trade Representative Catherine Tai, the parties will work on a more detailed agreement requiring any government support to aircraft manufacturers to be disclosed and provided to the extent that it does not exceed the fair competition.

As part of the EU-US deal, funding for research and development will be provided fairly and openly, and tax breaks to manufacturers will be rejected as programs that could harm the other party. In addition, both parties pledged to “cooperate in battling unfair trade policies practiced by other countries,” referencing China.

Due to the pandemic and a slow recovery in the airline and travel industries, Boeing and Airbus face the worst crisis in their history. Nevertheless, the deal was a success for both companies. According to a statement issued by Boeing, “Boeing welcomes the agreement with Airbus and the European Union that all future government support for the development or production of commercial aircraft should be on market terms.”

On the other hand, there remains the issue of the duties that the US still collects for steel and aluminum produced in Europe: 25% and 10%, respectively. EU officials suspended a plan to impose reciprocal duties on US imports from 25% to 50% last month to resolve the problem. EU duties on US goods have been suspended pending the resolution of the steel dispute with the US.

Boeing Company (NYSE: BA) stock gained 0.57% to close at $246.54 during the last trading session. Its shares traded in the range of $244.94 to $248.51. A total of 10.63 million shares were traded, below the daily average of 14.84 million shares seen over the past 100 days. During the previous month, BA gained 7.91%, while its shares dropped by -2.46% in the last five days.

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