The trade relationship between the United States and the United Kingdom is economically and historically important to both countries. While the two countries reaffirmed their long-standing alliance at the recent G7 summit, a number of trade-related disputes remain unresolved. Some recent tariff eases suggest that the two countries are looking to resolve these issues and that further changes could be made to the tariff environment.
Tariffs related to the dispute over subsidies for temporarily suspended aircraft
On March 4, 2021, the US and UK governments issued a joint statement temporarily suspending certain tariffs imposed by each country due to a long-standing dispute over government subsidies for the production of civilian aircraft. The United States and the EU (which at the time included the United Kingdom) had challenged before the World Trade Organization (WTO) the subsidies the other had given to manufacturers of civilian aircraft. (The US challenged the subsidies the EU gave to Airbus, and the EU challenged the subsidies the US gave to Boeing). After hearing the challenges, the WTO decided that the two governments could impose certain tariffs in response to these subsidies. (Tariffs imposed by and against the EU under these rulings remain in effect with respect to the UK, even after the UK leaves the EU).
The temporary suspension was to last four months and remove punitive tariffs in effect on certain aircraft and aircraft parts as well as other products such as cheese, clothing, certain machinery, wine and spirits. The purpose of the suspension was to allow the parties to try to resolve the underlying dispute over aircraft subsidies.
On June 15, 2021, it was announced that the United States and the EU had reached an agreement for a five-year suspension of tariffs on goods resulting from the Boeing and Airbus subsidy dispute. Two days later, the United States and the United Kingdom reached a similar agreement for a five-year suspension of these tariffs.
US threatens retaliatory tariffs against UK ‘tech tax’
In recent months, the UK and five other countries have imposed a “technology tax” that taxes digital service companies on their revenues rather than on their profits. The US government has opposed this type of tax because it unfairly targets social media companies and US technology companies. The United States has threatened to impose retaliatory tariffs against countries applying the “technology tax”. On June 2, the United States announced the tariffs, but immediately suspended them for up to six months to allow for new international negotiations for an agreement on the taxation of digital service companies. If implemented, tariffs on British goods would amount to almost $ 900 million (£ 640 million). The goods concerned would include make-up, perfume, ceramics, overcoats and certain types of toys. But for now, tariffs remain suspended pending further negotiations.
A cause of joy – Whiskey prices
The temporary suspension of certain tariffs announced by the United States and the United Kingdom on March 4, 2021 was a cause for celebration on both sides of the Atlantic, as it included the significant easing of tariffs on Scotch whiskey exports. . This suspension of tariffs on Scotch whiskey will now be extended to five years following the recent agreement between the United States and the United Kingdom.
A 25% tariff on UK whiskey exports to the US was imposed in 2019, causing losses of up to $ 700 million (£ 500 million) to the Scotch whiskey industry , sales in the United States having declined in favor of an alternative. Irish, American and Canadian whiskeys.
The easing of tariffs is cause for celebration (both for those who distill it and for those who drink it) and, with the recent American and European and American and British agreements on tariffs linked to the Airbus and Boeing dispute, are perhaps more signs to come with regard to a favorable realignment of trade interests between the United States and the United Kingdom.
These developments come as the US and UK continue to negotiate a possible free trade agreement. The two countries have been discussing such a deal since the UK left the EU. Several rounds of negotiations have taken place, but no agreement has yet been reached.
There have been actual and proposed changes to US-UK tariffs in 2021 and it is hoped that the temporary suspension of some tariffs between the US and UK will become permanent.
US President Biden and British Prime Minister Johnson met at the recent G7 summit in the UK. At their meeting, they pledged for a new “Atlantic Charter” to lay the groundwork for a sustainable global economic recovery from the COVID-19 crisis. This re-engagement in US-UK relations may bode well for the resolution of these trade issues.
This position is the result of a collaboration between the manufacturing law firms of the US law firm Robinson & Cole LLP and the UK law firm Brabners LLP. The article was written by R + C attorneys Kevin Daly and Jeff White and Brabners attorneys Roy Barry and Oliver Andrews.
Copyright © 2021 Robinson & Cole LLP. All rights reserved.Revue nationale de droit, volume XI, number 175