Tuesday, November 28, 2023

In an attempt to strike a trade deal with the United States, the UK says it will lower EU tariffs linked to Boeing-Airbus dispute

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The UK government has said it will lower tariffs the EU had imposed on $ 4 billion worth of U.S. products, amid the long-running dispute over illegal aid to aircraft manufacturers.Boeing Co.andAirbus SE.

The move is designed to reduce trade tensions with the United States and “show that the United Kingdom is serious about achieving a negotiated outcome,” the Department for International Trade said in a statement. Britain will set its own tariff policy when it completes its split from the EU at the end of the year.

The EU has announced the tariffs, which target various Boeing models and products, including spirits, nuts and tractors, in November as part of atit-for-tat climbingagainst the United States – which itself imposed levies on $ 7.5 billion of EU products in 2019. UK exports ranging from Scotch whiskey to cookies to curd cream have suffered from these duties .

Britain “shows the United States that we are serious about ending a dispute that does not benefit either country,” International Trade Secretary Liz Truss said in the statement. “We want to defuse the conflict.”

The UK has said it will continue to impose tariffs in retaliation for levies imposed on the UK steel industry by the US. These duties cover a long list of US items, including steel and aluminum products, as well as a range of other products such as textiles and food.

Britain’s move is “good news” for aviation in the US and UK, Boeing said.

“This deleterious tariff suspension allows us to work with the UK as a global commercial aviation hub and provides continued support to our employees in Puget Sound and Charleston,” the Chicago-based company said in a statement. “We support a level playing field with free and fair competition in aviation.”

Boeing isuprootingthe 787 Dreamliner program from a legendary manufacturing center north of Seattle; and the shifting of work to a non-union factory in South Carolina amid declining sales of widebody airliners.

A spokesperson for U.S. Trade Representative Robert Lighthizer did not immediately respond to a request for comment.

The UK has engaged in its own talks with the Trump administration in recent months to find a solution to the air dispute and has pushed for the US to lift tariffs on Scotch whiskey in particular. But due to Airbus’ significant presence in France and Germany, any real deal will likely have to involve the EU.

The bloc’s trade commissioner, Valdis Dombrovskis, said last week that the United States and Europe were engaged in intense negotiations. He added that “it is possible” that the two sides will reach an agreement by January 20 governing aid to Boeing and Airbus. He reiterated an offer to remove the EU’s retaliatory tariffs on $ 4 billion of US goods if the US does the same for its tariffs on $ 7.5 billion of EU goods.

Stephen Vaughn, who was Lighthizer’s right-hand man until last year, said the UK move was helpful from a US perspective and was a sign of goodwill. It would also put pressure on the EU, he said.

“It’s very encouraging to see the UK and the US making progress in these negotiations,” said Vaughn.

British Prime Minister Boris Johnson tries to forge ties with President-elect Joe Biden, the new US leader warning that any trade deal between the US and UK would be conditional on Johnson’s protection of the peace settlement in Ireland of the North in the context of the United Kingdom’s exit from the European Union.

Johnson took a step in responding to what Biden requested on Tuesday when he called off plans to tear up parts of the Brexit Withdrawal Treaty relating to trade with Northern Ireland. British officials hope the latest olive branch on tariffs will further ease the path of trade talks with Biden’s team.

But Tuesday’s decision also comes amid broader questions about the power the UK retains after Brexit to legally impose tariffs in cases before it leaves the EU. In the case of the Airbus-Boeing dispute, the UK insists it has retained this power.

When the EU rolled out retaliatory tariffs on November 10, it did so on behalf of the current 27 members of the bloc. The United States has also indicated behind closed doors that it believes the UK will not retain the legal power to impose retaliatory tariffs, according to a person familiar with the discussions.

Many business interests on both sides of the Atlantic are eager to see the end of tariffs, but neither does the liquor industry.

Move applauded

In a statement, the US Distilled Spirits Council applauded the UK’s decision not to apply retaliatory tariffs on US rum, brandy and vodka. He also urged the United States to “step up” its efforts to reach a settlement of the Boeing-Airbus dispute.

“It’s a sign of hope that a resolution on debilitating tariffs on American and British spirits could be within reach,” the group said.

Since 2018, bourbon whiskey and its Scottish parent have been caught in various transatlantic tariffs aimed at putting pressure on major political constituencies. The EU has targeted bourbon in large part because it is a product of the Kentucky Red State, which is home to Senate Majority Leader Mitch McConnell.

–With help from Brendan Case.

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