Earlier this year, the UK and the USA agreed a new joint approach to the trade conflict over aerospace tariffs. As a result, the United States temporarily suspended all retaliatory tariffs on direct exports from the UK to the US resulting from the Airbus dispute for four months (until 4 July 2021), in an effort to reach a negotiated solution to the 17-year long dispute. This announcement followed the decision by the UK Government in December 2020 to suspend retaliatory tariffs in the Boeing dispute.
Amazingly, this week, the International Trade Secretary Liz Truss struck an historic deal with the US on the Airbus-Boeing dispute in a major win for industries like Scotch whisky. After talks with US Trade Representative Katherine Tai at the Department for International Trade’s headquarters in central London, both sides have agreed to suspend retaliatory tariffs for 5 years and cooperate more closely on tackling unfair trade practices by non-market economies.
The 17-year dispute, the longest-running in the history of the World Trade Organization, has seen damaging retaliatory tariffs levied on products on both sides of the Atlantic due to disagreements over support for large civil aircraft. The disagreement has hit industries such as cashmere, machinery, and single-malt Scotch whisky that employ tens of thousands of people across the UK. The Scotch Whisky Association estimates the tariffs have cost the sector hundreds of millions of pounds in lost revenue.
The UK and US will now work together to put the agreement into practice and strengthen cooperation in the large civil aircraft sector.
Today’s deal marks the UK and US intention to:
- Not imposing countermeasures for 5 years.
- Establishing a working group on large civil aircraft that is led by the respective Minister responsible for trade.
- Providing financing to a large civil aircraft producer for the production or development of large civil aircraft on market terms.
- Providing research & development funding for large civil aircraft: through an open and transparent process; making the results widely available; and not providing R&D funding, or other support, to producers of large civil aircraft in a way that would cause negative effects to the other side.
- Collaborating on tackling non-market practices of third countries that may impact on their large civil aircraft industries.
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