Yahoo Finance UK and US strike tariff truce and vow to take on China
The US and UK are joining forces to fight Chinese efforts to conquer the aerospace market as part of a pivotal trade truce between the two nations.
Both countries have agreed to suspend tariffs for five years in a major victory for British producers of cashmere, biscuits, clotted cream and Scotch Whisky.
The trade ceasefire follows a 17-year dispute between the US and European Union, of which the UK was then a member, over European aerospace giant Airbus and its American rival Boeing.
The row resulted in the EU and US imposing tit-for-tat tariffs on billions of pounds worth of products, including £550m of British goods.
Liz Truss, the Trade Secretary, said the decision to suspend these duties was “fantastic news”, that “draws a line under an incredibly damaging issue”.
She said the two sides could now focus on taking their trading relationship to the “next level”, while also working together to challenge China on the global stage.
Katherine Tai, the US trade representative, said the agreement was a great step forward.
She said: “It is a model we can build on to ensure fair competition and address common challenges from China and other non-market economies.”
Concern over the rise of state-backed Chinese aircraft maker Comac has sharpened minds on both sides of the Atlantic.
China is working on a single-aisle aircraft, the C919, that is likely to win orders from across the Chinese sphere of influence once it enters commercial service.
Comac, founded in Shanghai in 2008, took a decade to develop the plane, with funding provided by Beijing.
Under the deal announced on Thursday, the UK and US “share information regarding cybersecurity concerns … and other areas relevant to non-market practices in the large civil aircraft sector”.
It follows a similar agreement between the US and EU reached earlier this week. Both deals involve a long-term suspension of tariffs as well as setting up working groups on civil aircraft production and a promise to collaborate against anti-competitive behaviour by other countries.
Britain helped bring an end to the dispute by announcing late last year that it would unilaterally suspend tariffs on US goods, as part of a goodwill gesture aimed at encouraging talks. The EU and US both later followed suit.
The pact will fuel hopes that the UK and America will begin working towards a full free trade deal, but the Biden administration has previously indicated that is not a priority.
Among the biggest beneficiaries of the deal will be single-malt whisky producers, who claim to have lost sales worth £600m over the past two years. Karen Betts, chief executive of the Scotch Whisky Association, said the suspension was “very good news” for the industry.
The dispute over aircraft subsidies, which prompted record-breaking tariff rulings from the World Trade Organisation (WTO), was a major source of tensions under the Trump administration.
The WTO determined that France, Germany, Spain and the UK had provided illegal support to Airbus through loans, and that the US had illegally boosted Boeing with tax breaks.
Some tariffs remain in place between the US and UK/EU as a result of a separate disagreement involving steel and aluminium. Talks on the duties are expected to be completed by the end of the year.
