SOURCE / GT VOICE
GT Voice: Is US using China to seek benefits on plane subsidies issue?
Published: Jun 16, 2021 10:37 PM
Southwest Airlines Boeing 737 MAX aircrafts

Southwest Airlines Boeing 737 MAX aircrafts Photo: IC

"Make a sound in the east, then strike in the west." This ancient Chinese tactic seems like a perfect description of the US strategy in dealing with its trade frictions with the EU.

The US and the EU on Tuesday agreed on a five-year truce to end trade dispute over aircraft subsidies for Boeing and Airbus. 

While the long-running aircraft subsidy dispute has nothing to do with China, it didn't stop the US from taking every opportunity to attack China.

"Significantly, we also agreed to work together to challenge and counter China's non-market practices in this sector that give China's companies an unfair advantage," US President Joe Biden said in a statement late on Tuesday.

The Biden administration has been playing up the so-called China's unfair trade practice theory, but this doesn't change the fact that trade differences between the US and the EU are difficult to resolve. The current ceasefire agreement over aircraft subsidy dispute is a telling fact that neither side can make any compromise on this issue.

If anything, the temporary ceasefire over Boeing-Airbus dispute seems more like a US maneuver for helping its own aircraft industry out under the cover of countering China. Ever since the grounding of the 737 Max planes, Boeing has been facing unprecedented difficulties and challenges due to the impacts of the global pandemic and loss of market share. The plane maker reported a net loss of $561 million for the first quarter of 2021, marking its sixth consecutive quarterly loss. While the company claimed to have gained traction in recovery, as things stand, the obstacles ahead are greater than ever.

Given the significance of Boeing to US manufacturing sector, the US government is likely looking for ways to ease the pressure on Boeing. In fact, on the same day when news came about the truce over the 17-year aircraft subsidy dispute, a senior US official told Bloomberg that they are engaging with China in a bid to win approval for Boeing's 737 Max planes that are still grounded in the country.

In Europe, Airbus has amassed a backlog of more than 6,000 jet orders, the 5-year truce in the US-EU deal may be exactly what Boeing needs to recover and play catch-up with its European rival. 

In fact, the disagreement over aircraft subsidies between the EU and the US may be just one aspect of the conflicting economic interests between the two sides, which also face challenges over issues such as US tariffs on EU steel and aluminum imports and digital taxation.

In a situation where Europe and the US have increasingly divergent interests when it comes to trade relations, it is delusional for some politicians to bridge the differences by simply advocating confrontation with China. At the end of the day, the China topic is just another disguise for the Biden administration to use to fight for its own interests.
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