The U.S. and Europe tariff war stopped together against China?

U.S. President Joe Biden arrived in Geneva, Switzerland, on Tuesday and will meet with Russian President Vladimir Putin tomorrow. On the second day in Brussels, the U.S.-European Union summit produced results that both sides were pleased to see: a major breakthrough in the dispute over Boeing and Airbus subsidies, and an agreement between the U.S. and the EU to counter China’s “non-market practices.

The Airbus-Boeing subsidy dispute between the United States and the European Union, which lasted 17 years and resulted in retaliatory tariffs, involved European products such as cheese, wine and U.S. cigarettes. But Biden and European Union Executive Committee President Van der Laan have suspended these retaliatory tariffs in March this year, and now the two sides have agreed to a five-year cease-fire.

Biden said in a statement: The United States and the European Union have agreed to suspend tariff measures (derived from the subsidy dispute) for five years, and we are committed to ensuring that businesses and labor can compete fairly. Importantly, we also agreed to work together to challenge and confront China’s non-market practices that give Chinese companies an unfair advantage in their industries.

Biden added that the U.S. and the EU will work together in specific ways, including inward and outward investment and technology transfer. “We can use this model as a foundation to address other challenges posed by China’s economic model.” The “values of fair play and transparency” that the U.S. shares with the EU have made democracies elsewhere stronger.

EU Executive Committee President Van der Laan said the summit had “achieved a breakthrough” in the long-running dispute. “It really opens a new chapter in our relationship, as we move from litigation to cooperation on the issue of aircraft (subsidies).

U.S. Trade Representative Katherine Tai reportedly held her first face-to-face meeting with her EU counterpart Valdis Dombrovskis on Monday (June 14) to discuss the long-running dispute over aircraft subsidies between the two sides. “We are finally united against a common threat, not against one of our closest allies,” Dyche said Tuesday. “We will use this model as a basis to address other challenges posed by China and non-market economy competition.”

De-escalating the U.S.-European trade conflict gives both sides more time to focus on broader agendas, such as concerns over China’s state-driven economic model, Reuters quoted diplomats as saying. The agreement should allow the U.S. and Europe to focus on addressing the threat posed by China’s burgeoning commercial aircraft industry.

Marjorie Chorlins, senior vice president of the U.S. Chamber of Commerce, said Monday, “There is no question that the rise of the Chinese aircraft industry …… has caught the attention of all parties.” She also noted the existence of “significant subsidies” in China.

Both the U.S. and the European Union have said they will seek to address the global overcapacity problem that largely surrounds China. The EU is pushing a new “positive agenda” with Washington on trade, including a coalition to push for WTO reform. The two sides may also agree to cooperate on trade and technology, such as developing compatible standards and promoting trade in artificial intelligence.

If both the U.S. president and trade representative in Brussels clearly emphasized the political purpose of the U.S.-EU trade dispute with China, the EU has been more evasive in linking the two and pointing to China. In particular, Van der Laan mentioned Tuesday that China’s human rights record has become a major issue of disagreement with the EU and has made China a “systemic adversary” of the EU. “When it comes to the system itself, human rights, human dignity is obviously the main issue that divides us,” she said. However, the fact that Van der Laan is raising the “lofty” issue of human rights at this time may be even more offensive to Beijing.

In addition to the United States, Canada and the European Union have launched a new partnership to secure supply chains for key minerals, reduce dependence on China, boost jobs and combat climate change. In a joint statement, Canada and the EU said the partnership will focus on strengthening “security and sustainability of trade and investment; integration of raw material value chains; science, technology and innovation cooperation; and environmental, social and governance” standards.

“Together with our EU partners, we talked about what we can do to build a cleaner economy in the years ahead,” Canadian Prime Minister Justin Trudeau told reporters in Brussels on Tuesday after meeting with EU leaders. “First and foremost, in order to continue to create good green jobs for the middle class, we must ensure a supply chain of key minerals and metals that are critical to products like electric car batteries.”

Speaking with Trudeau, von der Leyen said, “We want to diversify our imports away from producers like China because we want more sustainability, less damage to the environment, and we want transparency in raw materials.” “These raw materials, such as key minerals and metals, are essential to the green and digital transformation.”