Deutsche Welle (English edition)
EU, US extend truce in Airbus-Boeing dispute
The row — one of the longest-running in WTO history — saw the trans-Atlantic allies impose billions of dollars in tariffs. The deal eases a major point of tension between Brussels and Washington, for now.
The EU and US have agreed to extend a truce holding off punitive tariffs in their nearly two-decade dispute over aircraft subsidies to Airbus and Boeing as part of a broader effort by the two traditional allies to reset trade ties.
"This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft," EU chief Ursula von der Leyen said.
The feud that reached the World Trade Organization in 2004 saw both sides impose tariffs on $11.5 billion (€9.5 billion) worth of each other's goods. The duties were suspended for four months in March this year as the EU and US worked toward settling the dispute. Both sides have now agreed to keep the tariffs suspended for five years as they work on a deal on what subsidies to allow.
What prompted the truce?
The truce comes amid a broader push by US President Joe Biden to mend ties with allies, which took a major beating during Donald Trump's term, thanks in part to punitive tariffs on EU goods worth billions of euros.
The agreement is also meant to allow the Western aircraft manufacturers Airbus and Boeing to focus on the threat posed by China's state-owned planemaker Comac, which is looking to end their duopoly in the civil aircraft industry.
"Today's announcement resolves a longstanding trade irritant in the U.S.-Europe relationship. Instead of fighting with one of our closest allies, we are finally coming together against a common threat," US Trade Representative Katherine Tai told reporters in Brussels. "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."
Tai said the tariffs would remain suspended as long as "EU support for Airbus is consistent with the terms of this agreement" and US producers are able to "compete fairly."
The coronavirus pandemic, which pushed the global economy into the worst recession since World War II, further set the stage for negotiations. The aviation sector has been one of the worst-hit with much of international travel remaining suspended. Imposing punitive tariffs on struggling aircraft and parts makers would have only worsened their plight.
"I don’t think it’s terribly significant [for Airbus and Boeing], but it does de-risk them slightly. It just needed to happen," Teal Group aviation analyst Richard Aboulafia told DW.
Airbus welcomed the deal, saying it would provide "the basis to create a level playing field."
"It will also avoid lose-lose tariffs that are only adding to the many challenges that our industry faces,'' an Airbus spokesperson said.
is the dispute all
What about?
The European Union and the United States claim that each other's airplane manufacturer is unfairly subsidized.
It was the US that first filed a case with the World Trade Organization ( WTO) in 2004, claiming that Airbus, which is jointly owned by Germany, France, Spain and Britain's BAE Systems, had received $22 billion (€19.4 billion) in illegal subsidies. US officials estimated that the subsidies had resulted in an economic benefit of more than $200 billion.
The EU retaliated with a countercase, alleging that Boeing had received $23 billion in "tradedistorting" subsidies in the US, mainly for its research and development projects.
What did the WTO find?
Over the years, the WTO has ruled that both sides unfairly subsidized their aircraft makers.
In 2018, the WTO's appeals body upheld a 2016 ruling that the EU had supported Airbus with subsidized loans for the development of new aircraft — the A380 superjumbo and the A350 twin-aisle jet. The world body also found that the loans, which were repayable on delivery, amounted to illegal assistance.
A year later, the WTO handed the EU a victory in its countercase, saying America's favorable contract terms and tax breaks to Boeing had hurt Airbus sales. Interestingly, both the US and the EU claimed victory on hearing the decisions.
Ruling on the US sanctions request, the WTO in October 2019 allowed the US to impose tariffs on up to $7.5 billion worth of EU goods, the largest award in the trade body's history but well below the US request. The US trade office had estimated the harm from the EU subsidies to Airbus at $11 billion in trade each year.
In 2020, the WTO allowed the EU to impose tariffs worth $4 billion on US goods. That figure fell short of the EU's estimate of $12 billion in damages caused to Airbus by US support of Boeing.
In the meantime, the US eliminated a preferential tax rate for aerospace manufacturing last year to comply with the WTO rules. It said later there was no valid basis for the EU to retaliate against any US goods now that the subsidy had been removed.
In July 2020, Airbus, for its part, agreed to modify the terms of the repayable launch aid granted by France and Spain for the development of the A350 aircraft. The European Commission said the changes meant that the bloc was in full compliance with the rulings of the WTO in the dispute and that there was no ground for the US to maintain its countermeasures on EU exports.
Polish coal miners and power workers have staged several protests recently. Marek Lewandowski, spokesman for the NSZZ Solidarnosc (Solidarity) union, estimated that 7,000 to 10,000 people took part last week alone in Warsaw.
Poles have long become accustomed to miners' strikes and often raucous protests, but many were surprised after the unions and government appeared to have brokered an agreement to restructure the ailing mining sector in April.
Part of the restructuring package will be funded by EU money if the European Commission approves the government's proposals in July. And therein lies the problem.
What's behind the protests?
"The main reason for the protest is the lack of dialogue with the government," Lewandowski told DW. "The workers in energy and fuel companies have not received answers to basic questions concerning, first of all, job protection," Lewandowski said.
"As for our neighbor, Germany is opening new coal-fired power plants and new lignite mines, although they say they are moving away from energy produced this way," Lewandowski added.
Wind and solar energy would not be enough to substitute for coal, while the only viable option is nuclear energy, Krzysztof Gonerski, head of a Solidarity union branch at the Enea energy company in Gorzow Wielkopolski, believes.
"But Germany is already saying it will not allow a nuclear power plant near its border, so we will have to import expensive energy from Germany, from France," Gonerski told the AP news agency.
The protesters also want details on the plan for separating coal-based plants from power companies, putting them in the National Energy Security Agency (NABE) in a bid to give the largest power companies (PGE, Enea and Tauron) time to make the shift to greener alternatives.
Wasn't a deal already agreed?
In February, the government unveiled a plan to reduce coal's share in the power mix to 56% by 2030 through the use of offshore and onshore wind and solar energy, down from 69.7% in 2020, in part via construction of six nuclear power units.
On April 22, after seven months of negotiations, the government and unions agreed on a social contract for the coal sector through 2049. But unions wanted precise dates for mine closures and the exact amount of support for mining in 2021-2049 to be regulated by law.
State and EU aid
The EU's Just Transition Fund is a €17.5 ($19 billion) chunk of the EU budget and COVID-19 recovery fund allocated to help regions reduce fossil fuel industries and replace them with green enterprises. Poland employs over half of Europe's coal industry workforce and is thus in line for the biggest share of the fund.
According to the environmental law group ClientEarth, the deal is unlikely to get the European Commission's because of issues with compliance to receive state aid.
The EU plans to cut its carbon emissions to 55% below the 1990 level by 2030, which will be hard to hit without Poland on board. The target would require shutting down all coal-fired power plants in Europe by 2030, far earlier than Poland's desire to keep some coal plants operational until 2049.
It's already started
At the end of May, the top EU court ordered Poland to immediately suspend mining in the Turow lignite opencast mine, the source of 7% of Poland's electricity.
On June 8, PGE — the owner of Europe's biggest coal complex, Belchatow announced that operations would end at the plant in 2036, although a nearby mine is to operate for two years longer. PGE said it will allocate 5 billion zlotys (€1.15 billion/$1.3 billion) for the transformation of the local region, but this would be implemented only on condition the Just Transition Fund agreed.
Poland lags behind its neighbors
"Poland has a totally different starting point of the transformation than any other EU countries, mostly due to dependence of the domestic economy on coal and not having a nuclear power plant," Dominik Brodacki, an energy analyst at Warsawbased think tank Polityka Insight, told DW.
Coal phaseout strategies have been largely uncoordinated at regional or European level. Germany has decided to phase out coal by 2038 at the latest, the same goes for the Czech Republic.
Germany has made the most progress towards renewables, reaching 50% of renewables in its energy mix. The Czech Republic has nuclear power, which doesn't emit carbon dioxide. The country's six nuclear reactors supplied 35.2% of its electricity in 2019.
"In Germany the discussion was with all stakeholders in the energy sector, it was a wellstructured process," Lidia Wojtal, of Berlin-based think tank Agora-Energiewende and a former Polish climate negotiator, told DW.
"In Poland this was not the case, where it is highly fragmented, with big gaps, and people are being lost as the process moves on. It does not seem to be well-thoughtthrough," she said.
Do the protesters have a point?
"Belchatow is supposed to be closed down in 2036, but the mine which supplies it with the lignite should operate until 2038. What is the purpose? Such plans create a lot of uncertainty among the workers and provoke protests and frustration," Piotr Buras, Warsaw director of the European Council on Foreign Relations, told DW.
"Turow is yet another example of this chaotic and unrealistic policy," Buras argued.
"It is supposed to operate until 2046. This means it would be closed down just a few years before the EU and Poland should become fully climate-neutral. This is completely unrealistic — it will become economically unviable already in the 2030s.
The real problem that Poland
is facing will not happen in 2050, but with electricity shortages after 2025, when a number of coal-driven power plants will have to be closed because of high CO2 emissions not allowed by the EU or simply because of their age.
There is no plan how to supplement the losses, Buras warned.
"For years, Polish governments have been repeating the lie that coal can and will remain the basis of the Polish energy production,2 Joanna Flisowska, head of Climate & Energy at Greenpeace in Poland, told DW.
A long hot summer could be in store.