Thursday, March 4, 2021
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US suspends tariffs on single malt Scotch whisky

The US has agreed to suspend tariffs on UK goods including single malt whiskies that were imposed in retaliation over subsidies to the aircraft maker Airbus.

Tariffs will also be lifted on UK cheese, cashmere and machinery.

The duties will be suspended for four months while the two sides seek a long-term settlement.

On 1 January, the UK dropped its own tariffs on some US goods, put in place over a related dispute about US subsidies to Boeing.

It is the latest twist in a decades-old trade row that has seen the EU and the US target billions of dollars worth of each other’s exports with taxes.

The UK is part of the dispute as a former EU member. Airbus makes wings and other parts in the UK, but assembles its commercial aircraft in the EU.

Since the UK left the EU, it has been lobbying Washington to drop the duties on its own goods as it seeks a wide-ranging trade deal with the US.

The agreement to lift tariffs is temporary and applies only to UK goods. US tariffs will continue to apply to EU goods.

‘Sigh of relief’

Trade Secretary Liz Truss said the US had lifted the tariffs because the UK “has been able to be nimble” following Brexit.

She added the move “paves the way for an improved trading relationships with the US across the board”.

Karen Betts, head of the Scotch Whisky Association, called the suspension of tariffs “fabulous 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%, costing companies over half a billion pounds,” she said.

“So today, everyone in our industry – from small companies to large – is breathing a sigh of relief.”

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 UK tariffs on US whiskey relating to a separate dispute over steel were still being applied.

For more than a decade, the EU and US accused each other of propping up their home aviation markets with tax breaks, research grants and other aid.

But tensions flared under former US president Donald Trump, who in 2019 retaliated by putting tariffs on £7.5bn of EU goods, including UK products such as whisky and pork.

Last November, the EU hit back by hitting $4bn (£3bn) of American goods with tariffs as punishment for US subsidies for Boeing.

Talks between the US and UK on an aircraft subsidies deal abruptly broke off in January.

They resumed under new US President Joe Biden, while his top trade nominee Katherine Tai has said she will make it a priority to resolve the long-running dispute with the EU and Britain.

In a joint statement on Thursday, the UK and the US said that the suspension would “ease the burden on industry and take a bold, joint step towards resolving the longest-running disputes at the World Trade Organization”.

The two countries added that it would also 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”.

Airbus welcomed the removal of “lose-lose tariffs” and urged the UK and US government to reach a long-term settlement.

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