US To Suspend Some Boeing-Airbus Retaliatory UK Tariffs

Britain and the United States said Thursday they had agreed that Washington will temporarily suspend retaliatory tariffs on various UK goods and jointly de-escalate the longstanding fight over Boeing and Airbus subsidies.

The four-month tariffs suspension will freeze a 25 percent surcharge on Scotch whisky as well as hefty duties on cashmere, machinery and other US-bound British exports.

In a joint statement, the trans-Atlantic allies said the deal will "allow time to focus on negotiating a balanced settlement to the disputes".

They added it would also let them "begin seriously addressing the challenges posed by new entrants to the civil aviation market from non-market economies, such as China".

The agreement follows Britain's unilateral decision to suspend its retaliatory tariffs against the United States from January, which it said was "a show of good faith" to prevent more duties and allow for talks.

"I am delighted to say that our American allies -- under their new President and his hard-working staff at the US Trade Representative -- have embraced our move to seek a fair settlement," International Trade Secretary Liz Truss said.

"The benefits will be felt across our nation, especially in Scotland, where Scotch whisky distillers will be able to sell at lower prices in the United States, their most valuable market."

Britain's departure from the European Union's trading regime at the start of this year allowed the country to strike the bilateral agreement with Washington.

The 16-year-old conflict over government aid to the competing US and European aircraft manufacturers predates Brexit and has seen Brussels and Washington each impose punitive tariffs.

Europe's Airbus welcomed the US-UK deal, saying that it "supports all necessary actions to create a level-playing field".

The aircraft-maker added it "continues to support a negotiated settlement of this long-standing dispute to avoid lose-lose tariffs".

The trans-Atlantic trade feud saw US duties put on a record $7.5 billion (6.2 billion euros) in European goods authorised by the World Trade Organization.

The tariffs on Scotch whisky and a host of other items since October 2019 have hit exports to the once lucrative US market hard.

Before the levy, the US market for Scotch was valued at ?1.06 billion. By 2020 it had fallen 32 percent to ?729 million.

Brexit -- and the coronavirus outbreak -- has now compounded the problems facing the industry, with a slow-down in exports to Europe hitting profits.

"It has been a really tough period for us with Covid, US tariffs and Brexit as well," John Laurie, managing director of Scotland's oldest whisky maker, The Glenturret, told AFP last week.

The Scotch Whisky Association said in February the tariffs could have been avoided had the UK, EU and US governments and the European and American aerospace industries been "less intransigent".

Even before Britain left the EU single market and customs union late on December 31, exports to the EU fell by more than 15 percent to ?1.25 billion in 2020, the SWA said.

But Prime Minister Boris Johnson insisted the bilateral US agreement to suspend the tariffs "shows what the UK can do as an independent trading nation, striking deals that back our businesses and support free and fair trade".

"From Scotch Whisky distillers to Stilton-makers, businesses across the UK will benefit from the US decision," he said.

"I now look forward to strengthening the UK-US relationship, as we drive economic growth and build back better together."

The new arrangements will come into force on Monday, but be backdated to Thursday.

Britain's international trade ministry said it will continue to engage with the US to agree "a fair settlement" to the dispute, that "removes punitive tariffs".

The department noted it reserves the right to re-impose tariffs at any point "if satisfactory progress towards an agreeable settlement is not made".