By Laurence Norman, Yuka Hayashi and Doug Cameron
The U.S. and the European Union agreed Friday to suspend tariffs
on wine, luggage, produce and other goods related to a longstanding
dispute over government subsidies to Boeing Co. and Airbus SE, in a
sign of easing trade tensions.
The four-month suspension followed a conversation between
President Biden and European Commission President Ursula von der
Leyen, who both said the tariff cease-fire was a chance to improve
strained bilateral ties.
The decision results in the temporary removal of tariffs imposed
on products worth $11.5 billion, including levies of 25% the U.S.
imposed on $7.5 billion in imported European products, including
wine, whiskey and food items like cheese and olives, as well as
aircraft.
In exchange, the EU will lift duties on $4 billion U.S. products
including jetliners, wine, suitcases and produce including nuts and
cherries. It will also remove tariffs on U.S.-made rum, brandy and
vodka, but not on American bourbon and other whiskeys targeted in a
separate trade dispute.
The White House said that Mr. Biden underscored to Ms. von der
Leyen his commitment to "repair and revitalize the U.S.-EU
partnership."
"Noting our shared values and the world's largest trade and
investment relationship, the leaders agreed to suspend the tariffs
related to the World Trade Organization (WTO) Aircraft disputes for
four months and to work toward resolving these long running
disputes at the WTO," the White House said.
Ms. von der Leyen hailed the decision as a fresh start for the
trans-Atlantic relationship.
"This is excellent news for businesses and industries on both
sides of the Atlantic, and a very positive signal for our economic
cooperation in the years to come," she said in a statement.
U.S. lawmakers and groups representing beverage importers and
restaurants have urged the Biden administration to lift the
retaliatory tariffs in recent weeks, saying they were hurting the
hospitality industry at a time when its businesses are struggling
amid the pandemic.
"Lifting this tariff burden will support the recovery of
restaurants, bars and small craft distilleries across that country
that were forced to shut down their businesses during the
pandemic," the Distilled Spirits Council of the United States said
Friday.
The group hailed the agreement as a positive development even
though EU levies will remain on American whiskey, Harley-Davidson
motorcycles and other goods that were imposed to retaliate against
imported steel and aluminum levies imposed by the Trump
administration.
The suspension of the aircraft-related tariffs reflects easing
of trade tensions between Washington and its trading partners
following the aggressive trade policies of former President Donald
Trump, who contended that global trading partners had long been
taking advantage of the U.S.
Mr. Biden has said he wants to work closely with allies, and his
nominee for U.S. Trade Representative, Katherine Tai, said during
her confirmation hearing last week she was eager to resolve the
aircraft dispute.
The U.S.-EU announcement came a day after the U.S. and the U.K.
unveiled a similar agreement, in which both countries suspended
retaliatory tariffs in the aircraft dispute for four months. The
decision has resulted in the removal of U.S. tariffs on Scotch,
cheese and other products from the U.K.
In a statement, Airbus welcomed the decision and said it
supports "all necessary actions to create a level-playing field and
continue to support a negotiated settlement of this longstanding
dispute in order to avoid lose-lose tariffs."
Boeing said in a statement that it welcomed the suspension, and
that it hoped for "productive negotiations to finally resolve this
dispute and bring a level playing field to this industry."
The Airbus-Boeing dispute started in 2004 when the U.S. filed a
complaint with WTO, claiming the EU's subsidies for Airbus put
Boeing at disadvantage. Under the Trump administration, the dispute
turned into a tariff fight that snared food and beverage industries
unrelated to aircraft manufacturing. Washington imposed tariffs on
$7.5 billion worth of European wine and food items in late
2019.
The EU hit back with levies on U.S. whiskey, nuts and tobacco
valued around $4.5 billion. The U.S. stepped up the sanctions on
Dec. 31 with additional tariffs, placing virtually all wine imports
from France and Germany under its 25% tariff.
In the aircraft manufacturing industry, jetliner deliveries are
well below their pre-pandemic levels as the drop in travel demand
led cash-strapped airlines to defer or cancel orders. However, some
customers have said the tariffs -- and who pays them -- remain a
constraint on the number of deliveries.
"It has to get resolved. There are no winners out of this,"
Aengus Kelly, chief executive of AerCap Holdings NV, one oif the
world's biggest aircraft leasing companies, said at an investor
event last week.
Delta Air Lines Inc. expanding Airbus fleet made it among the
U.S. carriers most affected by the EU action, while Ryanair
Holdings PLC's Boeing 737 MAX delivery schedule made it the most
exposed European airline this year. Carriers haven't disclosed
whether they or the manufacturer paid the tariffs.
Delta and JetBlue Airways Corp. each received three Airbus jets
last month, which would have been subject to the EU tariffs. Boeing
reports final February deliveries next week, with only a single 737
MAX delivery to TUI AG so far disclosed among European
customers.
Write to Laurence Norman at laurence.norman@wsj.com, Yuka
Hayashi at yuka.hayashi@wsj.com and Doug Cameron at
doug.cameron@wsj.com
(END) Dow Jones Newswires
March 05, 2021 14:50 ET (19:50 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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