US, EU agree tariff freeze in aircraft dispute, eye China

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BRUSSELS/WASHINGTON – The European Union and the United States agreed to suspend tariffs imposed on billions of dollars of imports in a 16-year-old dispute over aircraft subsidies and said any solution would need to focus on China.

The two sides said in a joint statement that the four-month suspension would cover all US tariffs on US$7.5 billion  (S$10 billion) of EU imports and all EU duties on US$4 billion of US products, which resulted from long-running World Trade Organisation cases over subsidies for planemakers Airbus and Boeing.

It would ease the burden on industry and workers and focus efforts on resolving the conflict, the statement said.

Key elements of a solution would include outstanding and future support measures, monitoring and enforcement, and “addressing the trade distortive practices of and challenges posed by new entrants from non-market economies, such as China”.

The suspension followed a telephone call between US Joe Biden and European Commission President Ursula von der Leyen.

The White House said Biden had underscored his support for the European Union and his commitment to repair and revitalise the US-EU partnership.

Von der Leyen described the accord as excellent news for businesses and industries on both sides of the Atlantic, and a very positive signal for economic cooperation in the years to come.

EU trade chief Valdis Dombrovskis hailed a reset in the EU’s relationship with its and economically most important partner.

“Removing these tariffs is a win-win for both sides, at a time when the pandemic is hurting our workers and our economies,” he said.

The US tariffs cover EU planes and plane parts, wine and jam from France and Germany, Spanish olives, Germany coffee, screwdrivers and other tools, and liqueurs, cheese and pork from across the European Union.

EU tariff targets also include US planes and parts, along with tobacco, nuts, sweet potatoes, rum, vodka, gym equipment, casino tables, tractors and machines used in construction known as shovel-loaders.

The Distilled Spirits Council of the United States said the tariff suspension was a “promising breakthrough” at a critical time for the hospitality industry.

“Lifting this tariff burden will support the recovery of restaurants, bars and small craft distilleries… that were forced to shut down their businesses during the pandemic,” it said.

Friday’s agreement between Brussels and Washington mirrors the four-month tariff suspension agreed on Thursday by the United States and Britain.

Biden and von der Leyen also discussed the Covid-19 pandemic, tackling climate change and strengthening democracy during their call, as well as China, Russia, Belarus, Ukraine, and the Western Balkans.

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