November 25, 2024
UK to drop US goods tariffs in bid for trade deal
THE UK will drop tariffs against the US over subsidies for aerospace firms, in a bid to reach a post-Brexit trade deal with Washington.
In November, the EU hit $4bn of US goods with duties of up to 25% in retaliation for illegal state aid given to planemaker Boeing.
They will be suspended in the UK from 1 January – when the current post-Brexit transition period ends.
International Trade Secretary Liz Truss said the UK wanted to find compromise.
“As an independent trading nation once again, we finally have the ability to shape these tariffs,” she said.
“Ultimately, we want to de-escalate the conflict and come to a negotiated settlement so we can deepen our trading relationship with the US and draw a line under all this,” she added.
The fight over aircraft subsidies to Boeing and European rival Airbus pre-dates outgoing US President Donald Trump’s time in office, but trade tensions between the two allies have become strained recently.
Donald Trump’s administration hit the European Union (EU) with tariffs on $7.5bn worth of goods in retaliation for state support given to Airbus. Products such as Scotch whisky were affected by the ongoing row.
However, the ADS Group, which represents the UK aerospace industry, said on Wednesday that it was “disappointed” the UK made the decision without “securing some reciprocal action to resolve this dispute”.
Airbus, which has a huge UK factory making aircraft wings, said that it still aims to “find a negotiated settlement of this long-standing dispute to avoid lose-lose tariffs”.
‘There are no guarantees’
The industry is being polite officially, expressing “surprise” and “disappointment”, but is privately furious at what one top industry official said was a “capitulation” over the Airbus-Boeing dispute.
In January, Andrea Leadsom, then Business Secretary, told an Airbus audience the UK would continue to support EU efforts to negotiate a settlement over the dispute.
So why the change, and why now? The only plausible explanation is the government hopes to get a very late “mini deal” out of the departing Trump administration, and perhaps boost the slim odds of a Biden deal before his Congressional authority to do so expires in 2021.
There is a political carrot in the possible removal of US Scotch whisky tariffs, which could be used as electoral capital in Holyrood elections. But there are no guarantees. And, Team Biden shows no interest in doing trade deals with any nation quickly.
The UK employs tens of thousands in the Airbus supply chain, and the company is already having to deal with the impact of new frictions and barriers in trade with the EU. But now its arch competitor, Boeing, will be able to sell its planes 15% cheaper to the UK.
Trade Secretary Liz Truss clearly believes this sort of unilateral move will help “jump start” talks with the US. But Airbus is also a symbol of the pan-European co-operation that the UK wants to protect. Allowing the US to split the European position on this while make-or-break Brexit trade talks continue, will not go unnoticed in Brussels.
Major prize
Scotch Whisky Association chief executive Karen Betts described the announcement on Tuesday as “an encouraging step”.
“It shows the UK government’s determination to de-escalate the damaging transatlantic trade disputes that have seen Scotch whisky exports to the US fall by over 30% in the past year,” she said.
“We now call on the US government to reciprocate by suspending the tariffs on UK goods stemming from the Airbus-Boeing dispute, so that industries in the UK and the US affected by this dispute can once again trade freely.” – bbc.com
