EU and United States agree to suspend tariffs for five years, large civil aircraft dispute

The EU and the United States agreed to suspend application of tariffs worth $11.5 billion.

The EU and the United States agreed to suspend application of tariffs worth $11.5 billion.

The European Union (EU) and United States have reached an understanding relating to large civil aircraft that seeks to avoid future litigation.

According to a release from the EC, the EU and the United States agreed to suspend application of tariffs worth $11.5 billion for a period of five years. 

Read a release from the Office of the United States Trade Representative (USTR).

The World Trade Organization in October 2019 authorized the United States to impose additional duties on approximately $7.5 billion on EU products as a result of the large civil aircraft dispute. Subsequently, in September 2020, the EU was authorized to impose tariffs affecting $4 billion in U.S. trade as a result of a related WTO dispute (read TradeNewsFlash). Those tariffs in March 2021 were subsequently suspended for a period of four months. Read TradeNewsFlash.

Under the agreement, there is an intention by the EU and the United States to:

  • Establish a working group on large civil aircraft led by each side's respective official responsible for trade
  • Provide financing to large civil aircraft producers on market terms
  • Provide research and development (R&D) funding through an open and transparent process and make the results of fully government funded R&D widely available, to the extent permitted by law
  • Not to provide R&D funding as well as specific support (such as specific tax breaks) to their own producers that would harm the other side
  • Collaborate on addressing non-market practices of third parties that may harm their respective large civil aircraft industries
  • Continue to suspend application of their countermeasures, for a period of five years, avoiding billions of euros in duties for importers 

What’s next?

The two sides will continue discussions to operationalise their intentions regarding financing and R&D funding as well as specific support of large civil aircraft.
 

For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Principal
T: 202-533-3247
E: aahanchian@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

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