How did we (finally) get here?
Last week, following a 17-year long trade dispute, a deal was struck on the Airbus-Boeing dispute. Following talks between the UK’s International Trade Secretary Liz Truss, and the US Trade Representative Katherine Tai both sides have agreed to suspend retaliatory tariffs for 5 years.
The disagreement over support for the manufacture of large civil aircraft has been the longest running in the history of the World Trade Organisation (WTO). The agreement reached between the UK and the US will result in more cooperation to come, will also benefit industries including Scotch whisky and major machinery.
The agreement comes following the UK’s decision to deescalate the dispute by unilaterally suspending retaliatory tariffs on the US at the start of 2021. This resulted in a four-month suspension of tariffs while both sides negotiated a longer-term arrangement.
What’s in the agreement?
The intentions of the agreement more generally set out a positive outlook of support for the aircraft manufacturing sector including on R&D support, which will strengthen the global sector and not have harmful impacts on either side.
- Not imposing countermeasures for 5 years.
- Establishing a working group on large civil aircraft that is led by the respective Ministers responsible for trade.
- Provide financing to a large civil aircraft producer for the production or development of large civil aircraft on market terms.
- Providing research & development funding for large civil aircraft: through an open and transparent process; making the results widely available; and not providing R&D funding, or other support, to producers of large civil aircraft in a way that would cause negative effects to the other side.
- Collaborating on tackling non-market practices of third countries that may impact on their large civil aircraft industries.
What does this mean for industry?
Industry welcomes the agreement to suspend tariffs as this offers the opportunity to bring a permanent end to this long-running dispute at a time when the global aerospace industry faces significant economic challenges.
The agreement creates some level of certainty and security for the sector at this difficult time, but a permanent solution to the issues remain the preferred outcome. ADS will continue to work with the Department of International Trade as future trade talks with the US continue.