Aircraft builder Dispute over Airbus and Boeing put on hold

Status: 15.06.2021 6:17 p.m.

The transatlantic dispute between Airbus and Boeing had far-reaching consequences – in the form of special tariffs. Now the two aircraft manufacturers have buried the hatchet for the time being. By Torsten Teichmann, ARD studio Washington You speak of a breakthrough in Brussels. But the US and the European Union have not yet agreed on whether Airbus should repay subsidies or Boeing should forego funds. They have not found a long-term solution on how to regulate government support for the aircraft industry. Instead, both sides decided to freeze the dispute. US tariffs that have already been issued, which are intended as punitive measures for Europe, will remain suspended – for another five years. The same applies to punitive tariffs imposed by Europeans on certain imports from the USA.

“Armistice” in favor of jobs

The situation in the aviation industry certainly contributed to the compromise: The industry is severely affected worldwide by the consequences of the pandemic, travel restrictions and entry bans. Boeing needs security to invest in a successor to the 737 series, a new medium-haul aircraft with a single aisle and composite wings. For the USA there are a total of 1.2 million jobs, justified the trade representative of the USA, Katherine Tai, the readiness for a ceasefire in the trade conflict. The decision is in the interests of the American middle class.

June 15, 2021

Contribution to the transatlantic détente

And at the same time, the step serves the foreign policy goal of relaxing transatlantic relations again – as far as the domestic political sensitivities in Washington allow. Because the accusation of the elected US President Donald Trump that Europe is exploiting the United States has never completely disappeared. Specifically, the US is suspending higher tariffs on certain European imports as long as the EU’s support for Airbus does not go beyond the agreement that has now been made. And vice versa, presumably the same applies to the EU tariffs on Washington and Boeing.

June 15, 2021

Controversy has been smoldering for many years

The transatlantic trade conflict over direct and indirect state aid has existed for 16 years. The World Trade Organization (WTO) decided in autumn 2019 that subsidies for Airbus put its competitors at a competitive disadvantage. The WTO gave the United States the option of penalizing imports from Germany, France, Great Britain and Spain with tariffs totaling 7.5 billion US dollars annually. Since then, French cheese, German wine and EU aircraft have become significantly more expensive for the US market. Because nothing was progressing in talks from the US point of view, the administration under President Trump increased tariffs on European aircraft from ten to 15 percent in March 2020. In a second procedure, the WTO again approved the Europeans, who in turn paid higher customs duties on imports from the USA. It was about additional taxes amounting to 4.5 billion US dollars, for example on whiskey, nuts, tobacco and airplanes.

interview 11/10/2020

Business recently stagnated on both sides

In the past few months, Boeing and Airbus had only delivered a few machines. According to the “Wall Street Journal”, however, the tariffs on planes in the USA mainly affect Delta Airlines, which is expanding its Airbus fleet. In Europe, Ryanair in particular had to reckon with rising prices with its standard Boeing 737 fleet. It is not known whether the airlines took over the customs duties when the machines were delivered or the manufacturers themselves. The agreement in Brussels and the postponed conflict should give both sides a little more security.

11/9/2020

Focus on new competition

The US Trade Representative Tai also said that instead of fighting with your closest allies, they are coming together to face a different challenge. And the common adversary is – once again on this trip by US President Joe Biden through Europe: China. The People’s Republic is building its own aircraft industry with state investments. Europe and the US are complaining that China is violating the rules of international trade and laws protecting intellectual property. But that’s also true: a competitor is just emerging for medium-haul aircraft like the Airbus A320 or Boeing 737 – and that on the lucrative Chinese market.

EU-US summit Brussels and Biden – the sticking points

Status: 15.06.2021 2:04 p.m. Subsidies, punitive tariffs or relations with Beijing – the European Union and the USA are still fighting over a whole range of explosive problems after the change of power in Washington. An overview. The United States and the European Union are clearly trying to improve their relations again after the Trump presidency. Disputes in economic and geopolitics have been simmering for years. The new US President Joe Biden is as tough on some issues as his predecessor Donald Trump. On other questions, however, he showed a willingness to compromise in advance. When he meets EU leader Ursula von der Leyen today, these issues will be the main focus:

Subsidy dispute over Airbus and Boeing

For 17 years, the EU and the US had been fighting because they accused each other of improperly subsidizing their aircraft manufacturers Airbus and Boeing. Since Biden took office, there was a kind of armistice until July 11th. In the run-up to the summit, both sides had hoped to be able to resolve this dispute. In fact, the EU and US reached an agreement at today’s meeting. There is a breakthrough on the subject, said EU Commission President von der Leyen. This will open a new chapter in relationships – with cooperation instead of legal disputes. During Trump’s tenure, the United States had received permission from the World Trade Organization (WTO) to impose punitive tariffs of $ 7.5 billion on goods and services from the EU. Airbus aircraft were subject to a tax of 15 percent. A year later, Brussels also received WTO approval to impose punitive tariffs on US imports totaling four billion dollars.

October 18, 2019

Punitive tariffs on steel and aluminum

At the meeting between Biden and the EU leaders, the trade conflict over steel and aluminum will also come on the table. The commission hopes that the guest from Washington will agree to lift the punitive tariffs of 25 percent on European steel exports to the USA by December 1st. After Trump was voted out of office, Brussels decided not to raise its tariffs on whiskey, jeans or Harley-Davidson motorcycles as planned on June 1. Now it is up to the USA to turn words into deeds, says Deputy EU Commission President Valdis Dombrovskis. Trump had accused the EU of unfair trade practices and imposed punitive tariffs on imports in this area in June 2018. As a result, European steel exports to the USA rose by 25 percent and exports of aluminum by ten percent.

05.03.2021

Digital tax and data security

Brussels also sees a need for discussion regarding the taxation of digital content from US technology companies such as Google, Apple, Amazon and Facebook. The EU accuses companies of skilfully shifting their sales and profits to avoid tax payments in the EU. A Europe-wide tax for digital corporations has therefore been discussed in the EU for years. France and other EU countries have already introduced national digital taxes. In the meantime, both sides within the Organization for Economic Co-operation and Development (OECD) have agreed to start negotiations on the taxation of digital content. Brussels and Washington are also looking for a new agreement to enable the exchange of personal data from the EU to the US. This is important for the business models of the US digital corporations. The European Court of Justice overturned the so-called Privacy Shield Agreement last year because it did not adequately protect European data from access by US authorities and secret services.

11/25/2020

Further consideration for Nord Stream 2?

The German-Russian gas pipeline Nord Stream 2, which is supposed to double the capacity of Russian deliveries through the Baltic Sea, could also cause some tension at the meeting. She wasn’t just a thorn in Trump’s side. Biden also rejects the almost finished project – but obviously does not want to jeopardize the transatlantic partnership, which has just recovered. The US fear that Moscow has a means of political leverage in the pipeline. The planned start of Nord Stream 2 was delayed by US sanctions under Trump. In a gesture to Berlin at the end of May, Biden’s government decided not to impose sanctions on the operating company Nord Stream 2 AG and its German managing director. Washington wanted to create space for talks with the federal government.

analysis 05/20/2021

Relations with China

As far as relations with China are concerned, things seem to have calmed down a bit. The fact that the EU reached an investment protection agreement with Beijing without waiting for Biden’s inauguration to coordinate with the new US president was clearly disapproved in Washington. There one expects more support from the Europeans against the Chinese rival. The EU has since put the deal with China on hold and is unequivocally opposed to unfair trade practices and human rights abuses. After the EU imposed sanctions on the situation of the Muslim Uyghur minority in the Chinese province of Xinjiang, Beijing responded with sanctions against EU politicians and scientists. The European Parliament then refused to ratify the agreement. With information from Matthias Reiche, ARD-Studio Brussels

07/30/2020

Airbus logo at the factory in Hamburg, Germany. (Photo: AFP/VNA) European aircraft maker Airbus has welcomed a truce between the European Union (EU) and the US to ease transatlantic trade tensions over government subsidies for the two manufacturers. airplane export Boeing and Airbus . Speaking at a press conference on June 15, Airbus Chief Commercial Officer Christian Scherer said: “From an Airbus perspective, we warmly welcome that agreement.” Mr. Scherer stressed that anything that levels the playing field in this highly competitive industry and avoids a nasty tariff confrontation where neither side wins is good news. Earlier, US Trade Representative Katherine Tai said that the EU and the US had come to an agreement to suspend retaliatory tariffs related to the dispute over subsidies for two aircraft manufacturers Airbus and Boeing in the past 5 years. year. Ms. Katherine Tai said Washington could re-impose punitive taxes if US companies cannot “ fair competition ” with European companies. This agreement is said to mark a diplomatic victory in the US President’s trip Joe Biden to Brussels. In March, the EU and the US also agreed to suspend for four months the imposition of retaliatory tariffs related to subsidies to Airbus and Boeing. The suspension will last until July 10, with tariffs re-imposed on July 11, if no solution is reached. Due to a trade dispute over government subsidies for two of the world’s top rival aircraft manufacturers, Airbus and Boeing, EU and US continuously roll out tariffs to punish each other. In March 2018, then US President Donald Trump imposed a 25% tax on imported steel products and 10% on aluminum imported from the EU, Canada and Mexico. In response, the EU approved regulations to impose tariffs on $3.2 billion in US goods, including a 25% tax on American whiskey. In addition to the Airbus-Boeing issue, the two sides are currently arguing over France, Spain and some EU countries imposing digital taxes on major US technology firms.

Besides, European Commission President Ursula von der Leyen also expressed optimism that the two sides will reach an agreement as soon as possible. US and EU express cooperation on protection issues for Boeing and Airbus In March, the EU and the US also agreed to suspend counter-tariff actions for four months over a dispute related to protections for Airbus and Boeing. The US accused the EU of protecting aircraft maker Airbus to create a competitive advantage, while the EU also accused the US of taking similar measures against Boeing. The related lawsuits have dragged on for the past 17 years but have not come to an end. The dispute has led Brussels and Washington to repeatedly launch tariffs to punish each other. In March 2018, former US President Donald Trump imposed 25% tariffs on imported steel products and 10% on aluminum imports from the EU, Canada and Mexico. In response, the EU approved a regulation to impose tariffs on $3.2 billion in US goods, including a 25% tax on the country’s whiskey. In addition to the issue of Airbus-Boeing, the two sides are currently arguing about France, Spain and some EU countries imposing digital taxes on major US technology firms.

Impressive export growth
Since the EVFTA officially took effect (August 1, 2020), Vietnam’s export turnover to the EU market has achieved impressive results. According to statistics of the Ministry of Industry and Trade, by the end of December 2020, Vietnam’s export turnover to the EU market reached 15.62 billion USD, up 3.8% over the same period in 2019; the average export value per month is about 3.12 billion USD / month. Loading and unloading area for export at Dinh Vu port, Hai Phong. Photo: Victory In the first 2 months of 2021, Vietnam’s exports to the EU reached US $ 6.3 billion, an increase of 22.7% over the same period last year. Although the EU is a difficult market, Vietnamese enterprises quickly approached and took advantage of EVFTA’s opportunities, resulting in a trade surplus in the first 2 months of the year with the EU market being 4 billion USD, up 36.3% over the same period. period 2020. The items with the highest export growth to the EU include: Rubber products; computers, electronic products and components; iron and Steel; seafood, vegetables, rice … For example, rice, after EVFTA officially came into effect, some rice exporting enterprises signed fragrant rice export orders with higher value to the EU, even having shipments for the first time. are exported for over 1,000 USD / ton. This has spread a positive signal to Vietnam’s rice export situation in both volume and price. Along with rice, a series of shipments exported to the EU market have enjoyed 0% tax rate as committed in EVFTA such as passion fruit, tiger shrimp, pomelo, dragon fruit, suitcase, bag, shoes … seafood products have recorded significant export growth to the EU thanks to the impact of EVFTA earlier this year. Seafood export value in the first 2 months of 2021 reached USD 1.01 billion, an increase of 0.7% over the same period in 2020.
The Director of the Export and Import Department (Ministry of Industry and Trade) Tran Thanh Hai said that the growth figures of exports to the EU are evidences for the efficient exploitation of markets under EVFTA by enterprises. This is also a remarkable result of the industry and trade in promoting propaganda about EVFTA and guiding businesses to take advantage of incentives through the following channels: Free Trade Agreement (FTA Portal), internet , Facebook… In addition, the foreign trade system has captured market information and arising issues affecting Vietnam’s exports such as changes in importing countries’ policies, technical barriers, timely timely information for ministries, branches, associations and businesses to respond promptly.
Adhere to high standards of “rules of the game”
Experts say that EVFTA’s challenges have been creating reasonable pressure for Vietnamese enterprises to adjust and change their production methods and improve their competitiveness. In fact, over the past time, many businesses have made efforts to change, have preparedness, invest in new equipment to process and produce products in accordance with the requirements of the EU market.
For agricultural products, up to now, Vietnam has 39 sets of geographical indications that are recognized for protection in the EU without going through registration procedures, providing great opportunities for businesses and farmers in Vietnam. . This not only ensures the benefits for Vietnamese agricultural products, which have been in this market for a long time, but also opens up opportunities for many new agricultural products to access the market. In addition, many Vietnamese enterprises have the capacity to meet the requirements of EU importers for agricultural products and foodstuffs when more than 6,335 hectares of fruit have been applied VietGAP / GlobalGAP and have been issued with regional codes. Planting meets export standards; more than 5,000 hectares of aquaculture farms were recognized to apply VietGAP / GlobalGAP; 100% of export basa fish farms were issued with a code of origin; 100% of fishing boats commit to say no to illegal fishing …
For the textile and garment industry, enterprises have focused on new investment in yarn production – fabric weaving accounts for a high rate of localization. Many raw material production areas have been opened with an exceptionally large scale, including domestic and foreign enterprises such as: Thien Nam Yarn, Yarn – Nam Dinh Fabrics, Phu Bai Yarn, Yarn – Textile 8/3, Yarn Texhong … Besides, businesses also gradually shifted to import raw materials to markets with trade agreements with the EU, meeting the requirements of cumulative rules of origin that EVFTA offers such as Korea or Japan.
In other industries, businesses are also actively exploring to meet the conditions of origin certification (C / O) to take advantage of incentives and are constantly improving the quality of products and designs. , label packaging as well as focus on information traceability to develop products in the EU market right after EVFTA comes into effect.
Quality is the decisive factor
According to a survey by the Vietnam Chamber of Commerce and Industry (VCCI), in fact, not many businesses can catch up with the standards of this world’s most difficult market. Therefore, in the long term, businesses that want to access this market are forced to continue to change to meet the standards that the EU has specified. “Instead of trying to increase output and compete on prices, Vietnamese businesses need to improve their ability to meet market standards through technology investment, product quality control and improvement; upgrade the foundation of competitiveness in terms of business model, strategy, management, human resources, quality of goods and services according to EU standards ”- VCCI Chairman Vu Tien Loc recommended.
Offering recommendations for exporting enterprises, economist Nguyen Tri Hieu said that businesses must constantly improve product quality. Because European consumers do not care much about the price of the product, but focus on the quality of the product. In particular, the export consignments must ensure uniform quality, if not well maintained, enterprises will only step into the initial EU market, but it is difficult to compete and dominate this market in the long term. . “The tariff incentive is only an advantage for Vietnam to open the door to the EU, but it is difficult to keep market share in this difficult market if EU consumers do not see a quality advantage. Import tax reduction under EVFTA is not as important as whether Vietnamese products brought to the EU can be sold or not ”- Dr. Nguyen Tri Hieu emphasized.
Many experts and managers also believe that, to realize the great opportunities that EVFTA brings, businesses need to firmly, fully and accurately grasp the commitments in EVFTA related to the field and business activities. From that, they have the foundation, the basis for action, prepare resources, develop and implement business plans to exploit EVFTA’s advantages most effectively. According to the forecast of the Ministry of Industry and Trade, in 2021, Vietnam’s exports to the EU will grow positively in the context that the Covid-19 epidemic is expected to be better controlled, and measures to limit gradually. relax and EU economy is likely to gradually recover. This will be an important foundation for Vietnamese enterprises to take advantage of commitments in EVFTA more effectively and gradually dominate the EU market. “In order to protect Vietnam’s export industries from the risks of lawsuits against evasion of trade remedies, the Ministry of Industry and Trade continues to take measures against origin fraud. , enhancing post-inspection; proactively coordinating with competent agencies of the importing country in case verification of origin is required in order to detect and strictly handle cases of counterfeiting the origin of Vietnamese goods. ” – Deputy Minister of Industry and Trade Tran Quoc Khanh “In the coming time, Vietnamese enterprises must learn and grasp information about the EU market, from consumer tastes to regulations and standards of rules of origin, food safety and hygiene. … in order to improve the quality of goods, conquer the market. In addition, build sustainable chains from production to consumption to easily apply technology to production to speed up the quantity. , export product quality control. ” – Chairman of Vietnam Association of Small and Medium Enterprises (VINASME) Nguyen Van Than