Experts Airbus-Boeing truce is not a complete reset of US relations with the EU


US President Joe Biden agreed to reduce the upper income level for the third round of stimulus payments.


LONDON – The United States and the European Union could have reached a trade truce, but some analysts doubt whether the two sides will be able to agree on other contentious issues such as digital taxation and relations with China.

American president Joe Biden and European Commission President Ursula von der Leyen announced on Friday the suspension of tariffs imposed during the Trump presidency due to subsidies for aircraft. The dispute first surfaced in 2004, and the World Trade Organization ruled in 2019 and 2020 that the U.S. and the EU had granted illegal support to Boeing and Airbus, respectively.

$ 7.5 billion in tariffs on EU products and $ 4 billion in tariffs on US goods are now on hold for four months as both sides seek to reach an agreement that will include a permanent solution to support the aircraft sector.

European officials have said the announcement marks a “reset” in transatlantic relations after four volatile years under Trump’s presidency, but some analysts are not convinced.

“The suspension of tariffs is the first step towards unfreezing trade relations between Europe and the United States, and I hope it is a sign that those tariffs will soon be completely removed,” Fredrik Erixon, a trade expert at the ECIPE expert center, told CNBC on Monday.

“I am less convinced that the suspension signals a completely new orientation in transatlantic trade, with new agreements supporting greater economic integration.”

Technical giants

One particularly contentious issue is how some of the world’s largest technology companies are taxed.

Last week’s news is good news and removes the short-term risk to the economy that we’ve always had to count on for the last four years.

Carsten Brzeski

economist at ING in Germany

The EU and the US have been in conflict over this issue for years, as well as for security reasons around 5G. But since Biden arrived at the White House, the EU is convinced that some of these disagreements can be overcome.

In fact, the U.S. has opened the door to a digital tax deal, which the Organization for Economic Co-operation and Development wants to conclude this summer.

But Biden did not completely deviate from all the policies of his predecessor. He implemented the Buy American First initiative, to boost production in the country and boost the overall economy coronavirus pandemic takes tribute to the world’s largest economic power.

Meanwhile, the EU has also stepped up discussions on strategic autonomy, with the aim of reducing reliance on certain parts of the world.

“Both sides are raising their economic defenses against the world economy. For example, in the United States with new Buy America policies, and in Europe with a general campaign to wean themselves from technological dependence on the United States. but for that to happen we would first have to resolve controversial issues like digital taxes and the friction of new technology, ”ECIPE’s Erixon said.

China and Russia

In addition, there are some sensitivities about dealing with China and Russia.

The EU nevertheless signed an investment agreement with Beijing just weeks before Biden was inaugurated. fears the 27-nation bloc could jeopardize his relationship with a new president. At the same time, some US lawmakers feel that the EU is not assertive enough when it comes to human rights issues in China.

The United States also opposes a pipeline being built from Russia to Europe and has sanctioned some companies involved in the project.

However, in a press statement Friday, after a phone call with Biden, von der Leyen said, “We share a strategic view of Russia.”

Holger Schmieding, the chief European economist from Berenberg, told CNBC on Monday that the next item on the transatlantic to-do list could be “attempts to alleviate the conflict over the Nordstream 2 pipeline”.

Carsten Brzeski, an economist at Germany’s ING, also said the suspension of tariffs “does not mean everything will be all right, there are still many stumbling blocks ahead like Nordstream and the way China should be treated.”

But in the meantime, European exporters can breathe a sigh of relief, at a time when the region is facing a severe economic crisis.

“Last week’s news is good news and removes the short-term risk to the economy that we have always had to count on in the last four years,” Brzeski added.


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