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Biden And The EU Agree To A Truce In A 17-Year-Long Fight Over Aircraft Subsidies

Biden tried to repair ties with European allies and convinced them to take a tougher stance on China. Next he’ll confront Russia. But selling this at home remains the hardest part.

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President Biden on Tuesday announced a truce in a long-running trade war with the European Union, saying it was time to put aside the fight and focus together on the growing trade threats posed by China.

His Brussels stop at EU headquarters was the latest part of his mission to mend ties with allies that were strained by the go-it-alone approach of his predecessor before he sits down with Russian President Vladimir Putin in Geneva.

Biden was also set to launch a trade and technology council during his session with Ursula von der Leyen, president of the European Commission, and Charles Michel, president of the European Council.

The high-level group will work on strategies to have common standards for new technologies like artificial intelligence and biotechnology, regulations for technology platforms and export controls, and proposals to reform the World Trade Organization — all areas where China poses a significant challenge.

“The notion here is that the United States and Europe laid the foundation for the world economy after World War II and now has to work together to write the rules of the road for the next generation, particularly in the areas of economics and emerging technologies,” a senior administration official told reporters traveling with Biden.

The United States and EU have fought for 17 years over the use of tools like subsidized loans and tax breaks to support the aerospace sector. In 2019, the World Trade Organization ruled that both sides were breaking the rules.

The WTO authorized the United States to apply tariffs on $7.5 billion of imports from the EU per year – tariffs that affected not only aircraft, but items like wine and cheese. At the time, former President Donald Trump called it a “big win.”

The WTO also allowed the EU to apply tariffs on $4 billion of U.S. exports.

In March, shortly after Biden took office, U.S. and EU negotiators agreed to suspend the tariffs for four months. The new truce extends the suspension by five years.

U.S. Trade Representative Katherine Tai told reporters the deal was a model for trade spats in other sectors that China has roiled.

While she did not specifically mention the U.S. tariffs on European steel and aluminum exports, those Trump-era tariffs also were spurred by Chinese metals flooding markets.

European allies were particularly offended when Trump slapped tariffs on their exports of steel and aluminum justifying them as being needed to protect U.S. national security.

Those tariffs remain. Biden said his administration has not had enough time to work them out. Asked on Sunday how he justified keeping the Trump-era tariffs, Biden bristled. “A hundred and twenty days. Give me a break. Need time,” he said.

Talks over the tariffs are ongoing, but are unlikely to be quickly resolved, the senior administration official told reporters ahead of the Brussels meeting.

Trade deals are one of many areas the Biden administration needs to flesh out to be able to show gains from its approach to foreign policy.

While Biden brought allies at the G-7, NATO and EU on board with the concept of taking a tougher stance on China, there are few details on how that will happen.

There may have been convergence around the idea that “China is the challenge of our time, and that countries that are like-minded have to work together, " said Bonnie Glaser, a China expert at the German Marshall Fund of the United States.

But some European countries remain nervous that being too aggressive could backfire, hurting trade and investment with Beijing. “We have seen a growing tendency in China to retaliate against countries that criticize it,” Glaser said.

And despite the “positive veneer” and goodwill on Biden’s initial tour, allies wonder what they’ll see in the next administration, or the one after that, said Andrea Kendall-Taylor, who advised the Biden team during the transition to the White House.

“The European Union members are concerned that President Biden is an anomaly and that we could very easily snap back to a Trump-like president where alliances and the value of Europe is called into question,” said Kendall-Taylor, now with the Center for a New American Security.

Biden and his team are acutely aware that they have to do a better job selling the benefits of their foreign policy when they get back home. Biden talked about it during his campaign,

“Everything we do in our foreign policy should ultimately be judged by the metric of whether it is making life better, safer and easier for families in the United States,” the senior administration official said.

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