BA Boeing Co

By Daniel Michaels and Pietro Lombardi 

Airbus SE has agreed with Spain and France to change some financial-support agreements, in an attempt to bring an end to a yearslong trade dispute with the U.S.

The European plane maker said Friday that it thought the move would bring it into full compliance with World Trade Organization guidelines and remove the justification for U.S. tariffs.

The U.S. has for years argued that Airbus benefits from European government subsidies that have harmed the American aerospace industry and its workers. Last year, it won authorization from the WTO to impose tariffs in response, and swiftly introduced levies on $7.5 billion worth of aircraft, food products like cheese, and other goods from the European Union.

Earlier this year, it said it would increase tariffs on aircraft coming from the EU while the dispute remained unsolved.

Airbus said Friday it wanted to end the dispute, which it said was adding to the difficult environment amid the coronavirus pandemic. European industries targeted by the tariffs have pressed Airbus and their governments to settle the fight because the levies are compounding the economic pain from the outbreak.

Airbus has agreed to change a Repayable Launch Investment -- essentially government subsidized loans to help develop and produce new aircraft -- related to its A350 jetliner. It will increase the interest payments it makes to governments on each A350 delivered to a customer, to markets rates stipulated by the WTO.

Friday's announcements regarding France and Spain followed a similar move related to Germany in 2018, which the U.S. challenged and the WTO in December said was insufficient. Also in December, Airbus fully repaid its U.K. government loans for the A350.

Airbus Chief Executive Guillaume Faury said Friday the change demonstrates "Airbus has left no stone unturned to find a way toward a solution."

The EU said the move made "a strong case for a rapid settlement" of the dispute.

U.S. officials had no immediate comment. Washington didn't respond officially following the U.K. repayment in December.

The EU appealed the WTO's rejection of its German adjustment, but the organization hasn't assessed the challenge because operations in its appellate body have been blocked by a shortage of officials. The shortage is largely due to U.S. dissatisfaction with how the WTO has functioned in recent years.

It remains unclear whether the European move will satisfy U.S. negotiators. WTO disputes, including previous fights over aviation, have gone through multiple and protracted rounds of concessions that one side said brought compliance but the other rejected.

The dispute over aircraft subsidies dates back to 2004 and has become part of the Trump administration's trade negotiations with Europe. The two sides have been in formal negotiations since 2018 over a range of issues but have made little progress.

The WTO is expected to rule later this year on a related case brought by the EU against U.S. subsidies of Boeing Co., Airbus' main rival. At that point, the EU could be authorized to strike back with tariffs of its own.

Boeing declined to comment on Friday's announcement from Airbus, other than to refer reporters to the U.S. Trade Representative.

French Finance Minister Bruno Le Maire said Friday that Europeans want to discuss with the U.S. how to improve international rules for aircraft financing.

"But if the United States continues to refuse an amicable negotiation, the European Union will have no choice but to adopt tariff sanctions against American products," he said.

Noemie Bisserbe contributed to this article.

Write to Daniel Michaels at daniel.michaels@wsj.com and Pietro Lombardi at Pietro.Lombardi@dowjones.com

(END) Dow Jones Newswires

July 24, 2020 12:02 ET (16:02 GMT)

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