US trade chief warns EU loan to Airbus threatens truce

US Trade Representative Jamieson Greer warned the European Union on Monday, Oct. 26, that a record loan from the European Investment Bank to Airbus puts a fragile transatlantic trade truce at risk. That truce includes a deal on how large civil aircraft (LCA) projects are financed, Reuters reported. In a statement, Greer said that despite "ongoing requests," his office had received no details about the $3.4 billion financing the EIB, the EU's lending arm, agreed in June.reuters.com

"This situation injects substantial uncertainty into transatlantic trade in the aerospace sector," Greer said, according to Reuters. He said the matter should be "resolved as soon as possible to ensure market-driven production in the aerospace sector and to avoid violation of the terms of our hard-won LCA deal." The Financial Times reported that Greer said the loan risks "violating" the US-EU aircraft agreement. The trade office posted the statement under the title "Ambassador Greer Issues Statement on the Status of the U.S.-EU Détente Following Record-Breaking Loan from the European Investment Bank to Airbus".investinglive.com+2

The record financing

On June 29, the EIB announced a €3 billion financing package for Airbus. It called this the largest corporate loan it has ever authorized, and Airbus signed a first tranche of €1 billion that day. The money is meant to fund Airbus research and development through 2030 in commercial aviation, defense and security systems, with projects in France, Germany and Spain. The bank said the terms are flexible and include long maturities. EIB President Nadia Calviño said the deal was approved within about six months of the request, which "shows that Europe can move with speed and at scale to support its champions".eib.org+1

Boeing asked the US government in July to press for transparency on the loan. That request came amid speculation that Airbus could use the money to develop a new aircraft model. In July, the EIB denied giving Airbus unusual support. "This is a normal loan, carrying interest, part of the EIB's overall financing activity," a spokesperson said. Airbus Chief Financial Officer Thomas Toepfer said the loan was taken out "completely at market level." Neither Airbus nor Boeing responded right away to requests for comment on Greer's statement.reuters.com

A long-running dispute

The United States and the EU spent 17 years fighting at the World Trade Organization over aircraft subsidies, and each side won partial victories. In 2021 they agreed to a five-year truce that held off mutual tariffs on about $11.5 billion of trade. The truce was extended in July of this year, after the European Parliament approved a broader trade deal. Under that deal, the EU removed tariffs on US industrial goods, and the US set a 15% tariff on most EU goods.reuters.com

A key question for Washington is whether the EIB's terms amount to a subsidy, as the WTO has found with similar loans in the past. Greer did not announce any action against the EU. Whether the truce holds may depend on Brussels sharing the loan details he says his office has been asking for.investinglive.com