The EU is hoping that an agreement between plane maker Airbus and the governments of France and Spain will pave the way to settling a long-running trade dispute with the US at the World Trade Organization (WTO).

The row over subsidies paid to Airbus and US rival Boeing has been dragging on for 16 years and is the longest in WTO history.

Compliance

France and Spain have agreed to change the terms of a loan agreement made with the European plane maker for the development of the A350 aircraft.

The European Commission said this meant that the EU and the member states involved in Airbus – France, Spain and Germany – were “in full compliance” with a WTO ruling on the issue last year. After the WTO ruling, the US imposed tariffs worth up to $7.5 billion on European exports.

"This removes any grounds for the US to maintain its countermeasures on EU exports and makes a strong case for a rapid settlement of the long-running dispute,” said the commission.

Tariffs

Commissioner for Trade Phil Hogan called on the US to lift what he called “these unjustified tariffs” immediately, adding that the EU had also made specific proposals to reach a negotiated outcome to the dispute.

But he warned that if the US kept the tariffs, the EU would exercise its own rights to impose sanctions.

The WTO last year decided that the US had not taken enough action on subsidies to Boeing to comply with the trade body’s rules. It is due to decide in the coming weeks on what measures the EU can take in retaliation.