Years of litigation initiated by Boeing against Airbus in 2004 at the World Trade Organization came to a whimpering end Tuesday, with little to show for 17 years of legal pressure.

More worrisome for Boeing, the trade deal the Biden administration announced with the European Union includes an agreement that the two sides will now pivot to confront China on trade.

Earlier this month, Boeing CEO Dave Calhoun said the jetmaker won’t be able to ramp up 737 MAX production as planned next year unless China opens up its market. That outcome now seems at risk.

The Airbus/Boeing dispute had become “the white whale of trade issues,” its solution constantly eluding successive administrations until now, said Kelly Ann Shaw, a former attorney at the U.S. trade representative’s office and trade expert in the Trump White House.

The political deal between the U.S. and the EU resolves the dispute by suspending all previously imposed tariffs for five years and agreeing on a set of principles to rein in future subsidies.

Shaw, now a partner with law firm Hogan Lovells in Washington, D.C., previously spent three years in Geneva working directly on the aircraft subsidy cases for the U.S. She said that while the details of the deal have been left deliberately unclear, “it would be very hard to reinstate the tariffs in five years’ time.”

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“This dispute is effectively over,” Shaw said.

And she conceded that though one could choose to see the outcome as resolving uncertainty in the aerospace sector, another reading is that “many of the things the EU was asking for seem reflected” in Tuesday’s deal.

Nothing much achieved for Boeing

The U.S. suit at the WTO against the EU for its Airbus subsidies culminated in 2018 with a ruling that the U.S. could impose tariffs on European exports worth up to $7.5 billion.

The U.S duly imposed tariffs not only on Airbus aircraft but on French wine and cheese and Scotch whisky, among other goods. This led to about $2.2 billion in duties paid on those items.

In 2020, in an attempt to head off an EU countersuit for U.S. subsidies to Boeing, Washington state eliminated the longstanding aerospace tax break that had saved the U.S. jetmaker hundreds of millions of dollars each year since 2004.

Nevertheless, that countersuit finished with a 2020 ruling that the EU could impose tariffs on American exports worth up to $4 billion.

The EU then slapped tariffs on Boeing jets as well as nuts, spirits, tobacco and other American products, which led to about $1.1 billion in duties paid on those goods.

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The Biden administration had previously agreed with the EU to suspend all those tariffs while diplomats sought an agreement. The terms of Tuesday’s deal remove them for five years, though they are unlikely to be reinstated barring another heavy swing of the political pendulum.

Past subsidies to Airbus or Boeing are unaffected by the agreement.

Future subsidies to develop new planes must be loans granted on market terms. And each side promises that governments won’t fund research and development for future planes “in a way that would cause negative effects to the other side.”

A working group led by government trade ministers will meet and collaborate to “overcome any disagreements that may arise.”

The deal means subsidies will be allowed within certain limits, just as was the case before Boeing’s 2004 action started the litigation. The 1992 U.S.-EU Agreement on Large Civil Aircraft then in force allowed governments to subsidize up to a third of the cost of developing a new airplane, with provisions for paying back the loan over 17 years.

Airbus officials have repeatedly called for ending the WTO cases with just such a negotiated settlement. With the European aerospace champion having long since reached parity and even surpassed Boeing in its share of the commercial airplane market, it can now happily agree to mutually limit future subsidies.

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The tariffs on trade between the EU and the U.S. were an obstacle to President Joe Biden’s larger strategic goal of bringing the U.S. and its Western allies back together after years of tension during the Trump administration.

Since no other outcome to the aircraft dispute more beneficial to Boeing ever looked likely, it was time to deal.

But some experts don’t think the years of litigation, initiated in 2004 by then-CEO Harry Stonecipher, were worth it for Boeing.

“I don’t think it worked,” said Bill Perry, a Seattle-based lawyer with Harris Bricken and formerly an attorney at both the U.S. International Trade Commission and the Commerce Department. “I don’t think it changed anything.”

Alan Tonelson, a longtime manufacturing and trade analyst who runs the economics blog RealityChek, agreed.

“It certainly seems to have been all for nothing from the American standpoint,” said Tonelson.

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Confronting China

Nevertheless, the soft conclusion to the once hotly debated dispute was greeted with a round of political spin.

Both Airbus and Boeing issued statements welcoming the agreement.

In a statement, Biden called the deal “a major breakthrough.”

And Washington Sens. Patty Murray and Maria Cantwell issued statements saying the deal would secure a “more even playing field.”

Yet in reality, aside from killing the tariffs, the most impactful part of Tuesday’s agreement for the U.S. and for Boeing is a side deal in which the U.S. and the EU agreed to collaborate against “new state-financed competitors from nonmarket actors.”

Cutting through that smokescreen of diplomatic language, U.S. Trade Representative Katherine Tai spelled it out: The deal includes a “concrete, joint collaboration to confront the threat from China’s nonmarket practices,” she said.

The terms laid out in the agreement indicate that Chinese investment in Western companies, as well as investment in China by the West, and all kinds of information sharing and technology transfer will in future be subject to intense review.

Shaw, the former USTR attorney, said this reflects a political determination that it’s time to stand up to China and that there is now a “wide bipartisan consensus in Washington to take things even further.”

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This puts Boeing CEO Calhoun in a difficult spot. With tensions high, Boeing jet sales have become a political pawn. China hasn’t directly ordered a Boeing jet since 2017.

Calhoun has said many times recently that he is lobbying the Biden administration to loosen up trade with China and thereby boost Boeing jet sales.

Speaking at a Bernstein conference earlier this month, Calhoun identified restoring trade with China as one of three mountains Boeing has to climb, after ramping up the MAX and recovering from the pandemic downturn.

“Roughly 25% over the next 10 years of the growth will come from China,” Calhoun said, adding that if the China trade lockdown “goes on for too long, I pay a price.”

Calhoun said he cannot commit to a higher production rate of more than 31 MAX planes a month next year “until I have a real clarity around China.”

“It does affect the recovery trajectory,” he said.

Yet former government trade lawyer Perry said Chinese President Xi Jinping “has united Democrats and Republicans” in a determination to stifle further expansion by China.

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He said Calhoun needs to wake up to the reality that “the era of engagement with China is over.”

Commercial interests “have to bow to national security concerns,” Perry said.

Trade and manufacturing expert Tonelson agreed, saying that the EU and U.S. government subsidies pale in comparison to China’s actions, where the government controls all aspects of the country’s airline and aerospace businesses.

He said that “for Chinese entities big enough to play in global markets, there is no private sector and the subsidies are massive.”

“I’ll be interested to see if Airbus or Boeing can counter the long-standing policy of conditioning sales in China on transfer of intellectual property and the placing of manufacturing facilities in China,” Tonelson said.

While Calhoun sees this political confrontation with China as a serious problem, Boeing’s International Association of Machinists union takes a different view, applauding the Biden administration’s China pivot.

In a statement Tuesday, IAM District 751 President Jon Holden welcomed the trade representative’s “long-awaited efforts to coordinate with the EU in challenging China’s trade violations.”

Holden called for action through the new EU/U.S. agreement to prevent both Airbus and Boeing from shifting production work to China.