Laura Fraedrich, global trade and policy attorney with Lowenstein Sandler LLP, explains why the United States and European Union set aside their bitter and longstanding dispute over aerospace subsidies.

The putting aside of the 17-year dispute reflects the policy of the Biden Administration to address major issues in the global trade system through a multilateral approach, Fraedrich says. It also represents a desire on the part of both sides to come together and address trade disputes elsewhere in the world, especially those relating to China. “They see bigger fish to fry,” she says.

The action doesn’t signal an end to the aerospace dispute, which involved charges by both sides of unfair subsidizing of their respective major manufacturers, Boeing and Airbus. The parties agreed to hold off on pursuing further trade remedies for five years. “They decided that there are more important things on which they need to work together, and not use up valuable resources on an intractable issue,” Fraedrich says. In any case, they currently have no effective forum in which to pursue the debate, given the weakening of the World Trade Organization’s dispute-settlement mechanism.

Turning its attention to Asia, the U.S. might well reverse its decision under the Trump Administration to withdraw from the Trans-Pacific Partnership (recently rechristened the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, minus participation by the U.S.). But its approach to China is likely to involve cooperation with trade allies on multiple fronts, as the U.S. seeks to counter the growing power of China to influence trade matters in Asia.

The relationship among the U.S., its traditional allies and China will have to factor in geopolitical issues in addition to trade, as China flexes its economic and military muscles throughout the world.