US and UK reach Boeing-Airbus truce

Washington/London — The US and the UK reached a truce in a trade dispute involving Airbus and Boeing, agreeing to a five-year suspension on tariffs affecting various goods.

Products such as Scotch whisky, biscuits and clotted cream had been hit by additional duties of 25% as a result of of the spat, and the agreement suspends the tariffs until 2026 while talks take place, US Trade Representative Katherine Tai’s office said in a statement on Thursday.

While the US reached a framework in the long-standing aircraft-subsidy dispute with the EU earlier this week, it needed to negotiate a separate resolution with London after the UK left the EU last year.

The transatlantic allies have been working to resolve their trade differences so they can take a common stance against China’s state-backed advances in global commerce.

The US-EU deal, announced in Brussels on Tuesday, includes a five-year EU commitment not to reinstate its duties on $4bn worth of US goods such as tractors, video games and rum. In return, Washington withdrew its tariffs for five years  on $7.5bn worth of European food and luxury items, including Champagne, cognac and leather goods.

In addition to suspending tariffs, the EU and US agreed to create a working group to analyse bilateral disagreements and develop principles and appropriate actions; commit to provide transparent information on the funding for research & development in the sector; and jointly address non-market practices of countries such as like China.

The US suspended tariffs with the UK and then the EU for four months in March — a period that would have ended in early July — to create space to negotiate a long-lasting solution.

The World Trade Organization had ruled that the governments of Germany, France, Spain and the UK provided Airbus with illegal subsidies through launch-aid loans for aircraft development, equity infusions, debt forgiveness and various other financial contributions.

The Geneva-based trade body also ruled that Boeing benefited from illegal subsidies through a since-withdrawn Washington state business and occupation tax break.

Bloomberg News. More stories like this are available on bloomberg.com