The long-running dispute over aviation subsidies between the UK, EU and US could be resolved by July, according to International Trade Secretary Liz Truss.

The dispute over state aid provided by European governments and the White House to Airbus and Boeing dates back to 2004, resulting in a tit-for-tat tariff dispute when President Donald Trump was in office between 2016 and 2020.

Subsidy disciplines

Speaking to Reuters after a meeting with World Trade Organization (WTO) director-general Ngozi Okonjo-Iweala in Geneva, Truss said the UK and US were working on a draft text of an agreement, with negotiations focused on “subsidy disciplines” in the aerospace industry.

“I am determined to make sure the United Kingdom has a strong aerospace industry, that we reach a resolution with the US - which I think there absolutely is a landing zone for,” she said.

The EU has also claimed progress in its own negotiations with the US.

Trump tariffs

The dispute between the US and EU – including the UK before it completed its split from the trade bloc – ramped up under President Trump, who used a WTO ruling in the US’s favour to impose $7.5bn of tariffs a year on EU exports.

A WTO ruling last year gave the EU the right to impose $4bn of its own tariffs on US imports.

UK still involved

Although the UK is no longer a member of the EU it is still affected by the dispute as it is one of the four partner nations behind Airbus.

As well as bringing a case against the EU, the US also brought a case against each of the partner nations, according to Sky News.

However, the UK chose to unilaterally suspend tariffs with the US when it left the EU as part of its strategy for securing a post-Brexit trade deal.

Tariffs suspended

As reported in the IOE&IT Daily Bulletin in March, the US also dropped tariffs on a range of UK products caught up in the dispute – including Scotch whisky, cashmere and cheese, as well as EU goods such as French wines and German cookies.

The temporary deal gives a four-month window to achieve a permanent resolution on the issue.

Substantive progress

The read out from Liz Truss’s call with US trade representative Katherine Tai last week said the two were making “substantive progress” on several issues, including the Airbus-Boeing dispute.

EU trade commissioner, Valdis Dombrovskis also told the Financial Times that the EU and US are engaging “very intensively” on resolving the dispute, and hailed a “very welcome shift” since Joe Biden became president.

“The work is ongoing and I think there are reasons to expect we will be able to resolve this issue, and that we will not have to return to this mutual imposition of tariffs,” said Dombrovskis. 

He added that the two sides were working on new rules, known as disciplines, on future subsidy arrangements for the airline sector.