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US, UK suspend retaliatory tariffs over aircraft subsidy row


The US administration under former president Donald Trump had imposed tariffs on a range of EU food and some beverages

The US agreed a four-month suspension of retaliatory tariffs on British goods over an aircraft subsidy row, with both sides pledging to use the time to resolve the dispute.

The US administration under former president Donald Trump had imposed tariffs on a range of European Union (EU) food and some beverages, which the industry says had put its future at risk.

As a former member of the EU, Britain is party to the dispute.

The United Kingdom and the United States are undertaking a four-month tariff suspension to ease the burden on industry and take a bold, joint step towards resolving the longest running disputes at the World Trade Organisation, a joint statement said.

This will allow time to focus on negotiating a balanced settlement to the disputes, and begin seriously addressing the challenges posed by new entrants to the civil aviation market from non-market economies, such as China.

The tariff truce is separate from broader US-UK talks on a post-Brexit trade agreement, but sends a positive signal about those discussions.

Britain and the US were hoping to reach a trade deal before the expiration of fast-track trade promotion authority granted to the US federal government by Congress in July.

In order to hit that deadline, US trade officials would have to notify Congress about their intention to seal a deal sometime in April.

The multi-billion dollar tit-for-tat tariff battle between the US, the EU and Britain relates to a long-running row over state subsidies for plane makers Airbus and Boeing.

Airbus spokesman Clay McConnell welcomed the suspension of what he called ‘lose-lose tariffs and said the company supports all efforts to reach an agreement.

Airbus builds wings and other parts in Britain, but assembles its commercial aircraft in the EU.

Ivan Menezes, CEO of Diageo, the maker of Johnnie Walker and Talisker whisky said a permanent solution would help safeguard thousands of jobs across Scotland and the rest of Britain.

The agreement to lift tariffs is temporary and applies only to UK goods.

US tariffs will continue to apply to EU goods, according to a US administration official.

A British official described it as a ‘real win which justified a British decision to diverge from EU policy after Brexit and ditch the tariffs in hope of reaching an agreement with the Trump administration before it left office.

At the time, the EU questioned whether Britain had the legal right to keep those tariffs in place after leaving the bloc.

According to a source familiar with the matter, talks between Britain and the United States on a deal focused on the aircraft subsidies issue had been progressing but were abruptly ended in January.

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, she said.

US President Joe Biden’s top trade nominee, Katherine Tai, is headed to confirmation by the full Senate next week. She told the Senate Finance Committee last month that Washington had completed four rounds of negotiations with Britain since announcing the start of talks.

She said she would make it a priority to resolve the long-running dispute over aircraft subsidies.

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