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To Compete With China, The U.S. And EU Reach A Deal Over Aircraft Subsidies

STEVE INSKEEP, HOST:

The United States and the European Union have reached a truce on a long running and costly trade dispute involving two big aircraft makers, Boeing in the United States and Airbus in Europe. The U.S. and EU say they're doing this to focus on a common competitor, China. This is the latest in a theme during President Biden's trip through Europe. And NPR's Frank Langfitt has been covering it all. Hey there, Frank.

FRANK LANGFITT, BYLINE: Hey. Good morning, Steve.

INSKEEP: And I want people to remember, you're in Europe now. You've covered China in the past. So you're well-positioned to cover this story. What was this dispute about?

LANGFITT: Well, it's quite a story. This goes back, like, 17 years. It's quite a saga. The U.S. accused the EU of illegally subsidizing the aircraft maker Airbus. They won tariffs at the WTO, the World Trade Organization. Then the EU also made similar accusations. And they got tariffs. So altogether, like, I think it's 11.5 billion. They were able to hit each other's exports with tariffs. You're talking everything, Steve, from tractors to wine to cheese. I even went up to a Scottish whisky maker. And...

INSKEEP: Oh, yeah.

LANGFITT: ...Under the rules of the WTO, if you win these tariffs, you can hit all kinds of products. And so there's basically been this stalemate and, really, a cause of friction between these two enormous economies, the European Union and the No. 1 economy in the world, the United States.

INSKEEP: So it's touched many things beyond aircraft makers then.

LANGFITT: Yeah.

INSKEEP: And why would they end the dispute now?

LANGFITT: China. I mean, it's the answer to a lot of questions these days. If you remember, you go back to the '80s and the '90s, China was the workshop of the world, made toys, made T-shirts. China has been climbing the value chain over the last 25 years. They're working on AI, Internet. They want to build big world brands. And one of those is they want to get into airline - airplane manufacturing. They have a company based in Shanghai. When I was there back in 2000 - you know, five, six years ago called the Commercial Aircraft Corporation or COMAC.

And what the Americans are saying is that it's on track to become a legitimate rival of these two other companies. And it surprised me a little bit because I remember covering COMAC. And back then, a number of years ago, people in the airline industry thought, eh, you know, it's so complicated. The Chinese are not going to be able to do this that quickly. But apparently, from the EU and U.S. perspective, the Chinese are really coming along. And this is what Katherine Tai - I should say, she is the U.S. trade representative. This is what she said to reporters in Brussels just moments ago.

(SOUNDBITE OF ARCHIVED RECORDING)

KATHERINE TAI: Instead of fighting with one of our closest allies, we are finally coming together against a common threat. We agreed to work together to challenge and counter China's nonmarket practices in this sector in specific ways that reflect our standards for fair competition.

INSKEEP: Frank, I certainly didn't know they were going to take this step. But you could sort of see it coming at the beginning of the Biden administration when you heard people close to the administration indicate that President Biden wanted to confront China in coordination with U.S. allies, and especially U.S. allies in Europe.

LANGFITT: Absolutely. And I think what's interesting is that he - so far, the trip is going, at least rhetorically, pretty well for him, and that he's gotten support of the G-7 to call out China on human rights and NATO, what we saw just yesterday, calling China a challenge to the international system. And so what we're seeing is more of it now - basically, people putting down their trade weapons and saying, we're really going to focus on what we think is the real challenge economically, China.

INSKEEP: Frank, thanks for your insights, as always.

LANGFITT: Great to talk, Steve.

INSKEEP: NPR's Frank Langfitt is in London.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.