The 17-year-old conflict between the European Union and the United States over aircraft subsidies has been brought to a halt.

Both Brussels and Washington have battled it out since 2004 in parallel cases at the World Trade Organization (WTO) over subsidies for US OEM Boeing and its European rival Airbus. The agreement will result in five year suspension of the tariffs in the WTO’s longest running trade dispute.

“Both sides will now seek to overcome long-standing differences in order to avoid future litigation and preserve a level playing field between our aircraft manufacturers and will also work to prevent new differences from arising,” they announced.

The deal will see the EU and US agree that they will not provide research and development funding or tax breaks to their own producers in a way that would harm the other side. They have also announced collaboration on addressing practices of third parties such as China which may pose a threat to both the US and EU’s civil aircraft industries.

In March, both sides agreed to a four-month suspension of tariffs on $11.5 billion of goods from EU wine to US tobacco and spirits, imposed in response to the row. Following a summit between
European Commission President Ursula von der Leyen and US President Joe Biden, the tariffs have been removed for five years, while the two sides continue to work on an overall deal on which subsidies are permitted.

Longest trade dispute in history of WTO

von der Leyen said: “We have taken a major step in resolving the longest trade dispute in the history of the WTO. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit.”

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 sides are likely to agree on co-operation within trade and technology, including setting compatible standards and facilitating trade in artificial intelligence.

President Biden said his administration wanted to restore good ties with the US’ traditional allies, including the European Union, which had become strained by former president Donald Trump’s “America First” trade and foreign policy.

Airbus shares rose 0.4 per cent in Paris on Tuesday afternoon, while Boeing was up 0.5 per cent in pre-market trading in the US.

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