U.S, EU agree truce in 17-year aircraft subsidy battle

© Reuters. FILE PHOTO: An Airbus A350 jetliner flies over Boeing flags as it lands after a flying display during the 51st Paris Air Show at Le Bourget airport near Paris, June 15, 2015. REUTERS/Pascal Rossignol/File Photo

By Philip Blenkinsop

BRUSSELS (Reuters) -The United States and the European Union have agreed a truce in their near 17-year conflict over aircraft subsidies, bringing to a close one set of Trump-era tariffs which had soured relations between them.

The two sides have been battling since 2004 in parallel cases at the World Trade Organization over subsidies for U.S. planemaker Boeing (NYSE:BA) and European rival Airbus.

They agreed in March to a four-month suspension of tariffs on $11.5 billion of goods from EU wine to U.S. tobacco and spirits, which they had imposed in response to the row. On Tuesday they said they would remove them for five years, while still working on an overall deal on what subsidies to allow.

European Commission president Ursula von der Leyen said in a statement an EU-U.S. summit with U.S. President Joe Biden had begun with a breakthrough.

U.S. Trade Representative Katherine Tai spelled out Washington's thoughts on the deal, seen as allowing them to focus on the threat posed by China's nascent commercial aircraft industry.

Tai said the two sides had agreed to clear statements on what support could be given to large civil aircraft producers and would cooperate to counter investments in aircraft by "non-market actors", referring specifically to China.

"We have committed to meaningful cooperation," she said.

Former EU member Britain, which was also involved in the dispute as a home to Airbus production, said it hoped for a similar deal within days. Tai is due to meet her British counterpart Liz Truss on Wednesday.

STEEL DISPUTE LINGERS

The EU-U.S. agreement removes one of two major trade irritants left over from Donald Trump's presidency, the other being tariffs imposed on grounds of national security on EU steel and aluminium imports.

The European Commission, which oversees EU trade policy, last month suspended for up to six months a threatened June 1 doubling of retaliatory tariffs on Harley-Davidson (NYSE:HOG) motorbikes, U.S. whiskey and motorboats, and refrained from slapping tariffs on more U.S. products from lipstick to sports shoes.

Brussels and Washington have said they would seek to address excess global steel capacity largely centred in China.

The United States may find it tougher to remove the metals tariffs, which also apply to other countries such as China, because they are still backed by many U.S. metal producers and workers.

Brussels is also pushing what is dubs a new "positive agenda" on trade with Washington, including forging an alliance to drive WTO reform.

The two are also likely to agree to cooperate on trade and technology, such as for setting compatible standards and facilitating trade in artificial intelligence.