Britain and United States reach truce in Airbus/Boeing trade dispute

[June 17, 2021]  By Tim Hepher and Alistair Smout

LONDON (Reuters) -Britain and United States agreed on Thursday to resolve a long-running trade dispute over Airbus and Boeing and turn their attention to tackling Chinese subsidies, echoing a five-year tariff truce announced by Washington and Brussels.

A logo of Airbus is seen at the entrance of its factory in Blagnac near Toulouse, France July 2, 2020. REUTERS/Benoit Tessier/File Photo

Together, the deals draw a line under 17 years of battles at the World Trade Organization over aid for the world's largest planemakers and establish a common front against "non-market" funding, in a reference to China's rising aerospace sector.

The dispute had triggered a months-long transatlantic tariff war hitting industries such as Scotch whisky until the punitive measures were suspended earlier this year to ease negotiations.

Tariffs will now be set aside for a further five years while governments pledge to provide any funding on market terms, but the almost identically worded UK-U.S. and EU-U.S. agreements effectively remove for the time being a key source of transatlantic trade tensions.

"This will support jobs across the United Kingdom and is great news for Scotch whisky and other exports including aerospace who will no longer face punitive tariffs," British trade minister Liz Truss said on Twitter.

The European Union reached a truce two days ago with Washington in their conflict over aircraft subsidies, suspending for five years one set of Trump-era tariffs that had soured relations.

The two sides had been battling since 2004 in parallel cases at the World Trade Organization over subsidies for U.S. planemaker Boeing and European rival Airbus, which each claimed to have been damaged by unfair competition.

Britain has since left the European Union and Thursday's almost identically worded agreement achieves many of the same results as the EU-U.S. deal.

In December, Britain and the United States came close to a standalone aerospace deal that could have forced the hand of Brussels in its own talks with Washington, but drew back amid concerns over UK jobs, Reuters reported..

An official familiar with the talks said it had not been possible at that time to reach a balanced deal.

Airbus, which has 14,000 staff in Britain, has repeatedly warned the UK of the risk that it could shift work abroad, restricting Britain's ability to negotiate independently over aerospace.

Britain, whose ability to negotiate trade deals independently of the EU is central to its new "global Britain" stance, has a long history as one of four core nations involved in Airbus, a relationship that predated its EU membership, and its UK factories make the wings for Airbus commercial jets.

Separately, Britain is keen to agree a free trade agreement with the United States, as it seeks new relationships around the world following its exit from the European Union in 2020.

(Reporting by Alistair Smout and Tim HepherAdditional reporting by Andrea Shalal and William JamesEditing by Guy Faulconbridge and Frances Kerry)

[© 2021 Thomson Reuters. All rights reserved.]

Copyright 2021 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.