The United States and the EU have called for a truce in a long-running trade dispute involving rivals Boeing and Airbus. The fighting caused turmoil for unrelated products like Scotch whiskey and Spanish olive oil.
ARI SHAPIRO, HOST:
For years, the United States and the European Union have been locked in a high-flying trade dispute over rival aircraft makers Boeing and Airbus with billions of dollars and continental pride at stake. Well now the two sides have agreed to settle that fight and unite against a new rival: China. US Trade Representative Katherine Tai announced the agreement in Brussels, where President Biden was attending a summit with European leaders.
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KATHERINE TAI: Instead of fighting with one of our closest allies, we are finally uniting against a common threat.
SHAPIRO: Scott Horsley from NPR is joining us now.
SCOTT HORSLEY, BYLINE: Good afternoon, Ari.
SHAPIRO: This battle between Boeing and Airbus has been going on for a long time. Give us a quick story.
HORSLEY: Yeah, it doesn’t go back to the Wright brothers, but it seems like it. In fact, it started in the George W. Bush administration and escalated under former President Trump. Both the United States and Europeans agree: the flip side of using government subsidies to give your commercial aircraft business an unfair advantage in the world market. Ultimately, however, the subsidies provided by the United States and Europeans are overshadowed by the assistance China is now providing to its own fledgling commercial aircraft company. And Mary Lovely, who works at the Peterson Institute for International Economics, says the United States and Europeans have essentially agreed to work together now against this common competitor.
MARY LOVELY: Both parties realize that they have had to support their industries during the COVID crisis. They may be supporting industries as they try to green aviation, which will be a huge challenge, so they really want to put their heads together, rethink subsidies, how they can use them, but also how they can defend their own. Chinese subsidies industries.
SHAPIRO: Scott, the aviation industry has taken a huge hit during the pandemic. How does that influence this deal?
HORSLEY: Yes, it has been a very difficult time for Boeing and its suppliers, who are, of course, large employers in the United States. Overall, the aerospace industry employs more than half a million people in this country. In addition to the drop in air travel during the pandemic, Boeing is still reeling from the problems it created with its 737 Max jet. Of course, that plane was grounded for an extended period after two fatal accidents. The US and most other countries have already cleared the 737 Max to fly again, but China has yet to do so. And aviation analyst Richard Aboulafia, who works with Teal Group, says that’s another challenge the United States would like to overcome.
RICHARD ABOULAFIA: Really, this comes down to harmonizing the US and its allies to get the all-important Chinese airliner export market reopened.
HORSLEY: And, Ari, harmonizing is really the keyword there. It talks about the Biden administration’s broader approach to commerce. Unlike the Trump administration, the Biden administration really wants to unite other countries in a united front against China so that it doesn’t face fights with America’s allies along the way.
SHAPIRO: There were a lot of unrelated products that got caught up in this Boeing-Airbus trade. What does this mean to them?
HORSLEY: Well, a relief, frankly. In 2019, the US imposed tariffs on billions of dollars in European imports. Targets included French wine, Scotch whiskey, and many Italian cheeses. Those tariffs were suspended a few months ago while this deal was being negotiated, and now those tariffs have been frozen for five years. That’s good news for Philip Marfuggi. He’s a former president of the CIA, that’s the Cheese Importers Association.
HORSLEY: Marfuggi already has to pay double to bring a container of Italian cheese across the Atlantic as a result of the pandemic, and the last thing he and his clients want to see are expensive fees on top of that.
PHILIP MARFUGGI: Of course, they’ve definitely gone up and, you know, the ones who get hurt are us and the consumer, when it comes down to that. You know, we’re just paying a lot more money at the store level for all of our products.
HORSLEY: And the Europeans have also agreed to lift the tariffs they imposed on American exports in the Boeing case. However, I have to say, Ari, it’s still not easy for the transatlantic trade in general. The United States is still charging tariffs on steel imported from Europe, and Europeans are backing off with retaliatory tariffs on things like bourbon. So now that the bitter dispute between Boeing and Airbus has settled, perhaps negotiators can try to resolve the dispute over the steel and bitter mixture.
SHAPIRO: That’s Scott Horsley from NPR with a rare official CIA statement there.
Thanks a lot, Scott.
HORSLEY: You’re welcome.
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