The U.S. and EU are nearing a truce on the Boeing-Airbus dispute

LONDON — The United States and the European Union are moving closer to an agreement on a 17-year-long dispute over aircraft subsidies, as they gear up for their first summit since 2014 on Tuesday.

President Joe Biden and his EU counterparts are keen to show that there is new momentum in the trans-Atlantic relationship.

CNBC reported last week that the EU was pressing the White House to reach a deal to end trade tariffs imposed during the Donald Trump presidency, in relation to the Airbus and Boeing dispute that first emerged in 2004.

“We are working on it,” an EU official, who did not want to be named due to the sensitive nature of the trade negotiations, told CNBC Tuesday.

A second EU official, who also did not want to be named due to the sensitivity of the talks, said Tuesday morning that it was “too early to say” whether a breakthrough will be achieved when the leaders meet at lunch time.

The EU-U.S. relationship hit a low during the previous White House administration with Trump often criticizing Europe, accusing the EU of being worse than China with its trade practices.

Trump imposed duties worth $7.5 billion on European products after the World Trade Organization ruled that the EU had given unfair subsidies to Airbus. Shortly afterwards, the EU imposed tariffs worth $4 billion on U.S. products off the back of another WTO ruling that said the U.S. had granted illegal aid to Boeing.

The EU has been keen to set a date to remove these outstanding tariffs and suggested July 11 last week.

A third EU official, who also did not want to be named due to the sensitive nature of the negotiations, told CNBC Monday afternoon that this date was no longer in the draft document that both sides are due to agree on at the summit.

Jacob Kirkegaard, senior fellow at the German Marshall Fund of the United States, told CNBC’s “Squawk Box Europe” Tuesday that “the politics are as such and the economic logic is that we will finally have a deal on Boeing, Airbus. Which is, of course, good news for both companies but first and foremost is probably even better news for the many, many companies in both the EU and the U.S. that are hit by the retaliatory sanctions.”

French winemakers and Italian cheese producers have previously complained about the impact of the U.S.-EU trade tensions on their businesses.

It’s now clear that the EU wants to see more progress on the trade front. The 27-member bloc has also been pushing for an agreement on metal tariffs too, which were also imposed during the Trump presidency.

In 2018, Trump’s team slapped a 25% tariff on European steel and a 10% duty on European aluminum on the grounds of national security — something the EU vehemently opposed and retaliated against.

In response, a first round of tariffs worth 2.8 billion euros ($3.4 billion) was implemented by the EU and another round worth 3.6 billion euros was due to kick in this month. But these have been on hold in a sign of good faith, as the EU chases a truce with Washington.

The EU has not been shy to express its happiness at the election of Biden and in December presented a plan to revive trans-Atlantic ties post-Trump. At that time, the EU suggested the establishment of a Trade and Tech Council to remove certain trade barriers and coordinate their tech standards. The U.S. and the EU are expected to approve this group during Tuesday’s summit in Brussels.