Europe presses US to settle longstanding aircraft-aid dispute

European Union trade chief Phil Hogan stepped up a call for the U.S. to negotiate a settlement to the transatlantic dispute over aircraft subsidies, saying a deal would help Boeing Co. and Airbus SE weather the market slump triggered by the coronavirus.

Hogan said keeping alive 16-year-old litigation at the World Trade Organization would force the EU to impose tit-for-tat tariffs on American goods and ultimately leave both sides weaker.

“We’re going to face challenges from other parts of the world if we don’t get our act together between the United States and the European Union,” Hogan said on Thursday during an online event organized by the Carnegie Endowment for International Peace. “We should sit down and talk in the next couple of months. Otherwise, we’re going to be putting tariffs on each other for the rest of this year.”

The coronavirus-induced recession this year has raised the prospect of the EU and U.S. deescalating their aircraft-aid battle, not least because aviation has been one of the hardest-hit industries.

The U.S. targeted $7.5 billion of European goods with duties last October in WTO-authorized retaliation over unlawful support for Airbus. The EU is waiting for the Geneva-based global trade arbiter to rule as soon as September on the damages the bloc can seek over market-distorting state help for Boeing.

The U.S. said earlier this year that aid for Boeing has been brought into line with WTO rules. Hogan on Thursday said an agreement by Airbus last week to make changes to repayable launch aid from France and Spain marked a “major breakthrough” that strengthened the case for a negotiated deal.

“The United States and the European Union can negotiate an outcome for this to decide once and for all the level playing field that we want to trade on together and resolve issues for the future, in particular, about how we want to actually have these very important companies part and parcel of our economies,” he said.