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UK follows Europe in Airbus-Boeing dispute truce with US

written by Isabella Richards | June 18, 2021
A British Airways Boeing 787 Dreamliner (Source: BA)

The UK and US have struck a deal to settle the continuous trans-Atlantic Airbus v Boeing tensions, suspending tariffs and subsidy disputes that have stunted civil aircraft trade for over a decade.

International Trade Secretary Liz Truss and US Trade Representative Katherine Tai on Thursday agreed to suspend retaliatory tariffs for an additional five years to combat unfair trade practices and strengthen efforts against China.

“This deal will support jobs across the country and is fantastic news for major employers like Scotch whisky and sectors like aerospace,” said Secretary Truss.

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The UK, which was originally part of the EU, mitigated the dispute early this year, encouraging them and the US to suspend tariffs for four months while they agreed on a long-term arrangement.

The news immediately follows that of the EU and US, which struck the same deal, ending a 17-year long transatlantic dispute over aircraft subsidies.

Notably, the introduction of Trump-era tariffs on the import of goods into the US, while had a significant impact on the commercial aircraft manufacturing industry, also saw new taxes added across a wide range of goods, including alcohol.

Chief executive of the Scotch Whisky Association, Karen Betts, said the UK/US resolution is significant for whisky trade after losing astronomical amounts of profit from tariffs.

“The past two years have been extremely damaging for our industry, with the loss of over £600 million in exports to the United States caused by a 25 per cent tariff on Single Malt Scotch Whisky imposed as a result of the long-running dispute between US and European aircraft manufacturers,” she said.

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The deal struck between the US and UK encompasses various collaborations, including a five-year suspension on countermeasure tariffs, establishing a working group on large civil aircraft, providing financing to a large civil aircraft producer, tackling non-market practices of third-world countries that impact aircraft industries, and research.

The UK was one of the four nations involved with the establishment of Airbus, and its UK factories remain responsible for manufacturing the wings of Airbus aircraft.

The conflict began in 2004 when the US accused the EU of providing unfair subsidies to European planemaker Airbus, which soon saw the EU accuse the US of doing the same for Boeing.

When the EU and US announcement was made a few days ago to end the dispute, Tai said the two sides had to agree on clear statements on what support could be given to large civil aircraft producers.

She also insinuated that parties across both sides of the Atlantic would work to counter investments in aircraft by “non-market actors”, specifically referencing China, in light of Chinese aircraft manufacturer COMAC and its C919 aircraft, a direct competitor of the A320neo and B737 MAX.

This near two-decade-long dispute comes in light of growing Chinese manufacturing influence and increase in tariffs slapped on wine and meat during the worst of the pandemic.

The press release said that the UK and the US will now work together to “strengthen co-operation in the large civil aircraft sector”, establishing a post-Brexit free trade agreement.

However, while this agreement is a “culmination of many months of intensive negotiations”, Betts said, “this deal suspends tariffs rather than fully resolving the underlying dispute, what’s critical now is that the governments and aerospace companies on both sides stick to their commitments and work with one another constructively.”

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