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U.S. And E.U. Suspend Boeing-Airbus Dispute To Counter China


For years, the U.S. and the European Union have been locked in a high-flying trade dispute over rival jet-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 team up against a new rival - China. U.S. trade representative Katherine Tai announced the agreement in Brussels, where President Biden was attending a summit with European leaders.


KATHERINE TAI: Instead of fighting with one of our closest allies, we are finally coming together against a common threat.

SHAPIRO: NPR's Scott Horsley joins us now.

Hi, Scott.

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 history.

HORSLEY: Yeah, it doesn't quite date back to the Wright brothers, but it seems like it. It started actually in the George W. Bush administration, and it escalated under former President Trump. Both the U.S. and the Europeans agree - the other side of using government subsidies to give their commercial jet business an unfair advantage on the world market. Ultimately, though, the subsidies the U.S. and the Europeans provided are dwarfed by the help that China is now giving to its own nascent commercial aircraft company. And Mary Lovely, who's with the Peterson Institute for International Economics, says the U.S. and the Europeans have essentially agreed to work together now against this common competitor.

MARY LOVELY: Both sides realize that they've had to support their industries through the COVID crisis. They may be supporting the industries as they try to green aviation, which is going to be a big challenge, and so they really want to put their heads together, rethink subsidies - how they can use them, but also how they can defend their own industries from Chinese subsidies.

SHAPIRO: Scott, the aviation industry has taken such a big hit during the pandemic. How does that factor into this deal?

HORSLEY: Yeah, this has been a very tough time for Boeing and its suppliers, which are, of course, huge 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 recovering from the problems of its own making with its 737 Max jet. Of course, that plane was grounded for an extended period after two deadly crashes. The U.S. and most other countries have now cleared the 737 Max to fly again, but China still hasn't done so. And aviation analyst Richard Aboulafia, who's with the Teal Group, says that's another challenge that the U.S. would like to overcome.

RICHARD ABOULAFIA: Really, this comes down to harmonizing the U.S. and its allies into getting the all-important Chinese jetliner export market open again.

HORSLEY: And, Ari, harmonizing is really the operative word there. It speaks to the Biden administration's larger approach to trade. Unlike the Trump administration, the Biden administration really wants to rally other countries in a united front against China so it's not picking fights with U.S. allies along the way.

SHAPIRO: There were a lot of unrelated products that got caught up in this Boeing-Airbus trade war. What does this mean for them?

HORSLEY: Well, relief, frankly. In 2019, the U.S. imposed tariffs on billions of dollars' worth of European imports. The targets included French wine, Scotch whisky, lots of Italian cheeses. Those tariffs were suspended a few months ago, while this deal was being negotiated, and now those tariffs have been put on ice for five years. That is welcome news for Philip Marfuggi. He's a past president of the CIA - that's the Cheese Importers Association.

SHAPIRO: (Laughter).

HORSLEY: Marfuggi is already having to pay twice as much to bring a container of Italian cheese across the Atlantic as a result of the pandemic, and the last thing he and his customers want to see is costly tariffs on top of that.

PHILIP MARFUGGI: Of course, they've definitely gone up. And, you know, who gets hurt is us and the consumer, when you come down to it. You know, we're just paying a lot more money at store level for all of our goods.

HORSLEY: And the Europeans have also agreed to lift their tariffs which they'd imposed on U.S. exports in the Boeing case. I should say, though, Ari, it's not yet smooth sailing overall for the trans-Atlantic trade. The United States is still charging a tariff on imported steel from Europe, and the Europeans are pushing back with retaliatory tariffs on things like bourbon. So now that the bitter Boeing-Airbus dispute has been grounded, maybe negotiators can try to unwind the steel and sour mash dispute.

SHAPIRO: That's NPR's Scott Horsley with a rare on-the-record statement from the CIA there.

Thanks a lot, Scott.

HORSLEY: You're very welcome. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.