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U.S., EU suspend subsidies dispute to focus on China

Justin Ho Jun 16, 2021
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While the U.S. and the EU have been fighting over which side unfairly subsidizes aircraft production, China has been building up its own aircraft industry, said Eswar Prasad at Cornell University. Kenzo Tribouillard/AFP via Getty Images

U.S., EU suspend subsidies dispute to focus on China

Justin Ho Jun 16, 2021
Heard on:
While the U.S. and the EU have been fighting over which side unfairly subsidizes aircraft production, China has been building up its own aircraft industry, said Eswar Prasad at Cornell University. Kenzo Tribouillard/AFP via Getty Images
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The United States and the European Union have agreed to suspend a long-time dispute over subsidies for Boeing and Airbus. The dispute has led to a tariff war in the past two years. The U.S. is calling this a “joint collaboration” in large part to confront China.

While the U.S. and the EU have been fighting over which side unfairly subsidizes aircraft production, China has been building up its own aircraft industry, said Eswar Prasad at Cornell University. “At the moment, the Chinese domestic aircraft industry is not mature enough, but that day is not that far away.”

Prasad said EU-U.S. cooperation can help them prod Beijing to give Airbus and Boeing more access to the Chinese market, “and also to stop excessively subsidizing its domestic manufacturers.”

China also gives the U.S. and EU an excuse to wind down a 17-year dispute, said Kadee Russ at the University of California, Davis. Importers on both sides of the Atlantic will save billions in retaliatory tariffs for imports like French wine and Harley-Davidson motorcycles.

“And so removing them signals that we’re trying to return to an era of multilateralism within the global trading system,” Russ said.

The U.S. and the EU say the agreement to suspend the trade dispute will last five years.

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