The United States agreed a four-month suspension of retaliatory tariffs imposed on British goods such as Scotch whisky over a long-running aircraft subsidy row, with both sides pledging to use the time to resolve the dispute.
The US administration under former president Donald Trump had imposed tariffs on an array of EU food, wine and spirits, including on Scotch whisky, which the industry says had put its future at risk.
Britain is party to the dispute as a former member of the European Union. Airbus builds wings and other parts in Britain, but assembles its commercial aircraft in the EU.
“The United Kingdom and the United States are undertaking a four-month tariff suspension to ease the burden on industry and take a bold, joint step towards resolving the longest running disputes at the World Trade Organization,” a joint statement said.
“This will allow time to focus on negotiating a balanced settlement to the disputes, and begin seriously addressing the challenges posed by new entrants to the civil aviation market from non-market economies, such as China.”
The multi-billion dollar tit-for-tat tariff battle between the United States, the European Union and Britain, which left the EU at the end of 2020, relates to a long-running row over state subsidies for planemakers Airbus and Boeing.
Airbus spokesman Clay McConnell welcomed the suspension of what he called “lose-lose tariffs” and said the company supports all efforts to reach an agreement.
No comment was immediately available from Boeing.
The agreement to lift tariffs is temporary and applies only to UK goods. US tariffs will continue to apply to EU goods, according to a U.S. administration official.
A British official described that as a “real win” which justified a British decision to diverge from EU policy.
In December, Britain said it would use its new-found freedom outside the EU to diverge from the bloc’s common trade policy deciding to unilaterally suspend the tariffs in hope of reaching an agreement with the Trump administration before it left office.
Talks between Britain and the United States on a separate deal focused on the aircraft subsidies issue had been progressing but were abruptly ended in January, according to a source familiar with the matter.
“I am delighted to say that our American allies – under their new President and his hard-working staff at the US Trade Representative - have embraced our move to seek a fair settlement,” she said.
US President Joe Biden’s top trade nominee, Katherine Tai, is headed to confirmation by the full Senate next week.
She told the Senate Finance Committee last month that Washington had completed four rounds of negotiations with Britain since announcing the start of talks. She said she would make it a priority to resolve the long-running dispute over aircraft subsidies with the EU and Britain.
The Scotch Whisky Association said it welcomed the news.
“The tariff on single malt Scotch whisky exports to the US has been doing real damage to Scotch whisky in the 16 months it has been in place, with exports to the US falling by 35 per cent, costing companies over half a billion pounds,” Scotch Whisky Association CEO Karen Betts said.
The Distilled Spirits Council of the United States welcomed the decision, calling it a hopeful sign that an agreement was in sight, but said it was disappointed that British tariffs on US whiskey relating to a separate dispute over steel were still being applied.
Tai, asked if she would prioritise an agreement with Britain, told the committee in written responses to questions released this week that Britain was “an important trading partner and ally.”