The UK and US have agreed a deal to resolve a long-running trade row over subsidies given to Airbus and Boeing.

 

The agreement will see retaliatory tariffs, imposed by both countries during the dispute, remain suspended for five years.

The announcement comes two days after the European Union also agreed a truce with the US to end their 17-year conflict over aircraft subsidies.

The UK government called it a “major win for industries like Scotch whisky”.

The Scotch whisky industry welcomed the deal after previously being hit during the dispute with a 25% tariff on single malt by the administration of former President Donald Trump.

The Scotch Whisky Association estimated more than £600m in exports was lost due to the trade barrier, which also affected other UK industries including cashmere and construction vehicles.

 

Whisky

 

International Trade Secretary Liz Truss said the deal would support jobs across the UK and was “fantastic news for major employers like Scotch whisky and sectors like aerospace”.

She added that it meant the UK could now focus on taking its “trading relationship with the US to the next level”.

“We took the decision to de-escalate the dispute at the start of the year when we became a sovereign trading nation, which was crucial to breaking the deadlock and bringing the US to the table,” she said.

 

Liz Truss

What is the Boeing-Airbus row about?

The dispute between the US and EU has escalated over many years, with both sides accusing the other of unfairly propping up their flagship planemakers.

In 2019, the World Trade Organization ruled that the EU had illegally provided support to Airbus, clearing the way for the US to respond with tariffs worth up to $7.5bn (£5.4bn) in annual trade.

Roughly one year later, in a parallel case, it ruled that the US benefits to Boeing also violated trade rules, authorising the EU to hit the US with tariffs worth roughly $4bn.

Since then, both sides have taken steps to remove the assistance found at fault.

The US and the EU have taken a much more conciliatory stance in the 17-year dispute since President Biden took over from predecessor Donald Trump, who imposed tariffs on the EU.

UK officials hoped for compromise talks, casting the measure as an example of the benefits to the UK’s ability to act as an independent trading nation following Brexit.

In March, the US dropped tariffs on UK cheese, cashmere, machinery and Scotch whisky, after the UK had dropped its own tariffs on some US goods in January.

The agreement comes as US President Joe Biden tries to bolster support for his more assertive stance towards Russia and China, and move away from Trump-era trade rows.

 

United States Trade Representative Katherine Tai said reaching an agreement with the UK was a “great step forward for our special relationship”.

She said the deal was a “model we can build on” to ensure “fair competition and address common challenges from China and other non-market economies”.

Both Boeing and Airbus welcomed the truce. Airbus previously said that the agreement “will provide the basis to create a level-playing field which we have advocated for since the start of this dispute”.

SNP MP David Linden welcomed the removal of tariffs, but argued the UK government had dragged its feet on the issue.

“From the outset, Scotch whisky should never have been caught in the crossfire of this trade dispute and today’s news will see the industry in Scotland breathe a massive sigh of relief,” he said.

 

This announcement of a five-year truce in the aircraft dispute means relief for those wanting to sell whisky, cashmere and Stilton across the Atlantic – but leaves bigger questions unanswered.

Attention in this row now switches to hammering out a permanent solution – and working together on what America see as a growing risk: whether China is playing fair as it strives for its economic goals.

But missing from today’s announcement was any indication of when talks on a UK free-trade deal with America might resume.

Katharine Tai has been reviewing progress made by the Trump administration in the five rounds of talks so far. She says her approach is “worker-centric” – suggesting that if the process continues, America is likely to have some big demands in areas such as agriculture, which have yet to be tackled.

And it’s a deal that the UK is keen to capture as it flexes its post-Brexit ambitions. About a sixth of Britain’s trade is with America – more than 10 times as much as with Australia, with whom a deal was struck earlier in the week. But there’s not much to suggest it’s moved up America’s to-do list.

 

BBC

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