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Biden, E.U. end 17-year Airbus-Boeing trade dispute, seek to calm relations after Trump

President Biden delivered remarks championing the United States' relationship with the European Union and NATO during the June 15 U.S.-E.U. Summit. (Video: The Washington Post)

BRUSSELS — President Biden and European Union leaders reached a deal Tuesday to put to rest a 17-year-old trade dispute about subsidies for aircraft manufacturers, officials said, a significant step in calming trade relations after the fury of the Trump years.

A five-year truce, which was announced at a meeting Tuesday in Brussels between Biden and the top leaders of E.U. institutions, was the latest effort in a transatlantic reconciliation tour that the new president started last week at the Group of Seven summit in Britain.

At each stop, including at NATO on Monday, Biden has tried to mend ties that were damaged under President Donald Trump, who often drew close to traditional American adversaries and targeted longtime allies with vitriol.

“It’s overwhelmingly the interest of the United States of America to have a great relationship with NATO and the E.U.,” Biden said Tuesday as he started the meeting with E.U. leaders. “I have a very different view than my predecessor did.”

Tuesday’s deal will quell fears that the E.U. and the United States could hit each other with tariffs on goods as varied as French wine and Harley-Davidson motorcycles, as they did in recent years as part of the airplane subsidy dispute, which involves Boeing and Airbus.

“Today’s announcement resolves a long-standing trade irritant in the U.S.-Europe relationship,” said U.S. Trade Representative Katherine Tai. “Instead of fighting with one of our closest allies, we are finally coming together against a common threat.”

Even as supply lines are strained, Biden is in no rush to scrap Trump’s steel tariffs

Europe also welcomed the deal.

“This meeting started with a breakthrough on aircraft,” European Commission President Ursula von der Leyen said in a statement. “The agreement we have found now really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft . . . after almost 20 years of trade disputes.”

But as was the case in Biden’s earlier stops on his first international trip as president, lingering irritants from the Trump years remained unresolved after Tuesday’s E.U. meeting, a sign that elements of Trump’s foreign policy may outlast him. Biden did not remove tariffs that Trump imposed on European steel, a major frustration for the E.U., nor did he announce plans to remove pandemic-era restrictions on travel from Europe to the United States, even though the E.U. has made plans to reopen to visitors from the United States. The White House has said both issues need a bit more time.

Biden on Wednesday will wrap up his European tour with a meeting in Geneva with Russian President Vladimir Putin, promising to deliver a far tougher message to the Kremlin than the one from Trump, who sought Putin’s approval and friendship.

In Biden’s talks with von der Leyen and European Council President Charles Michel, the U.S. president sought to move from antagonism to accord.

Under the terms of the E.U.-U.S. deal on airplane manufacturers, the two sides agreed to put aside differences in their battle over government financial aid for rivals Boeing and Airbus. The truce will suspend tariffs related to the dispute for five years, Tai said.

The two sides released a two-page “understanding on a cooperative framework” that commits them to funding production and development of large commercial jets “on market terms.” They also pledged to provide government research funds for new aircraft programs through an “open and transparent process” without causing “negative effects to the other side.”

Any implementation disagreements are to be resolved through quiet bargaining in a new working group.

Tai told reporters that the “revolutionary” agreement would enable the United States and its European allies to collaborate on meeting the common threat of a burgeoning Chinese commercial aircraft industry.

Although China has struggled for a quarter-century to master the complex industrial challenge of fielding a homegrown rival to Airbus and Boeing, it has made sufficient strides in recent years to threaten aircraft makers’ hopes for continuing large sales in the Chinese market.

“China’s plan for aircraft is less about global competition and more about indigenous substitution: They seem to be preparing for a future where China has decoupled from the West,” said Richard Aboulafia, vice president for analysis for the Teal Group, an aviation consultancy.

China has risen to dominate industries such as steelmaking, shipbuilding and solar panel production, through the use of generous subsidies for state-owned companies. Officials want to team up to address the potential threat of Beijing’s employing similar strategies in the aircraft sector.

“It positions the U.S. and E.U. in a cooperative position. For about 20 years, we have been at each other’s throat,” Tai told reporters. “We need to work together to counteract aggressive, nonmarket policies that are going to threaten our industries.”

Still, Tai and Valdis Dombrovskis, a European Commission executive vice president, acknowledged that some of the details of Tuesday’s agreement remain to be worked out over the next five years in the joint working group.

“I’m confident that five years’ time is sufficient to build trust and confidence on both sides so we can then put this dispute definitely to rest,” Dombrovskis said.

Tai contrasted the Biden administration’s collaborative approach toward the E.U. with the Trump administration’s tariff-first stance. U.S. officials “put away our litigation briefcases” and agreed to discuss a common approach to China’s use of nonmarket strategies, she said.

The World Trade Organization in 2019 authorized the United States to impose tariffs on $7.5 billion worth of European goods in response to illegal European aircraft subsidies. The E.U. retaliated with its own levies on $4 billion of U.S. products, including whiskey, molasses and motorcycles.

“This deal will shore up the longer-term competitiveness and innovation of a key sector, aircraft, that is one of the most important sources of middle-class jobs at home,” Tai said.

In another nod toward shared interests, the United States and the E.U. announced a cooperative trade and technology council, which could help the allies shape global standards for digital innovations and fight back against “China’s nonmarket practices.”

E.U. and U.S. officials also have been working toward an agreement to address Trump’s tariffs on industrial metals and Europe’s retaliatory levies on U.S. goods. But a resolution on that remained out of reach Tuesday, and the two sides agreed to keep talking.

Last month, the E.U. suspended plans to impose additional countermeasures on $3.8 billion of U.S. products in a bid to pave the way for progress in that dispute.

“We have to de-escalate and solve E.U.-U.S. trade disputes,” Dombrovskis, the bloc’s top trade official, told the European Parliament last week.

The two sides have said they will work toward lifting the metals tariffs by Dec. 1. Asked at a news conference Sunday to justify continuing what are known as Section 232 tariffs amid his calls for transatlantic harmony, Biden suggested a willingness to eliminate them.

“A hundred and twenty days. Give me a break. Need time,” he replied, understating the number of days since his inauguration.

The metals tariffs are popular with Biden’s labor allies in the United Steelworkers union. Commerce Secretary Gina Raimondo praised the levies earlier this year, saying they “helped save American jobs.”

Europeans view them with particular frustration because they were imposed under U.S. rules that allow the president to address national security threats. E.U. leaders say their countries are allies, not a danger to U.S. national security.

“It was good to hear that the U.S. clearly agrees with us that the European Union is not a national security threat, so we are happy about that,” von der Leyen said. She said the E.U. had suspended its countertariffs for six months to create “space” for a solution and said that any resolution needs to occur before the suspension ends.

Officials said they wanted to end the dispute quickly.

“People standing around the world and looking at us fighting in the past few years, when we did, you know they pop open bottles of champagne when that happens,” the E.U. ambassador to the United States, Stavros Lambrinidis, said last week at the German Marshall Fund in a preview of Biden’s trip.

Removing the tariffs is likely to require eventual agreement to address the global surplus in steel and aluminum production that the Trump administration cited as a reason for imposing the measures in 2018.

That won’t be easy: 30 nations have been holding talks on the issue for five years with little to show for them.

Still, the mood surrounding Biden’s European talks is certain to be seen as an improvement over the recent past. Trump, who often complained that “Europe treats us worse than China,” irritated European leaders with harsh criticism of their trade practices and even threatened to impose steep tariffs on U.S. imports of German automobiles.

Tuesday’s discussions will not eliminate transatlantic trade frictions. U.S. technology companies already are gearing up to oppose an E.U. legislative proposal that would impose controls on the operations of the largest online platforms. The Digital Markets Act would impose especially tough rules on American Internet giants such as Facebook, Google, Amazon, Apple and Microsoft.

“I think we’ll hear confirmation the two sides are continuing to work on certain trade issues, working to resolve Boeing-Airbus and the [Section] 232 tariffs. But I am concerned there are other looming issues, like the Digital Markets Act, that mean we haven’t seen the true conflict even start yet,” said Jamieson Greer, a partner at King & Spalding law firm and a former top trade official in the Trump administration.

Lynch reported from Washington. Quentin Ariès in Brussels contributed to this report.