Boost for Scotch industry as US scraps tariffs for five years

The US and UK have resolved a long-running dispute over government subsidies given to Airbus (AIR.PA) and Boeing (BA) as part of which they will suspend tariffs next month for a period of five years, a move likely to please the Scotch industry.

“This will support jobs across the UK and is great news for Scotch whisky and other exports including aerospace who will no longer face punitive tariffs,” the UK's secretary of state for international trade, Liz Truss, said in a tweet.

Back in March, the two sides had undertaken a four-month tariff suspension, which included a pause on a 25% tariff on Single Malt Scotch Whisky.

Scotch Whisky Association CEO Karen Betts said: "This deal removes the threat of tariffs being reimposed next month and enables distillers to focus on recovering exports to our largest and most valuable export market."

She said the past two years had been "extremely damaging" for the industry, with the loss of over £600m ($836m) in exports to the US.

"Given, however, that this deal suspends tariffs rather than fully resolving the underlying dispute, what’s critical now is that the governments and aerospace companies on both sides stick to their commitments and work with one another constructively," she added.

She also said US whiskies remain subject to tariffs on entry into the UK and EU as a result of a separate dispute on steel and aluminium, "and we hope these tariffs can also be resolved quickly”.

The airplane dispute began in 2004, when the US filed a case at the World Trade Organization against the EU arguing that the bloc was illegally subsidising Airbus. The EU then filed a complaint against the US in May 2005, for its support to Boeing.

Both imposed tariffs on each other's exports.

Read more: EU and US end 17-year Boeing-Airbus row, hit pause on 'harmful tariffs'

US tariffs affected 19 different product categories, including aircraft, wines and spirits as well as dairy but the impact on scotch whisky appeared to be most pronounced.

As part of the new agreement "each side intends not to impose countermeasures for a period of five years, starting from 4 July 2021, in the expectation that the other side will contribute to establishing fair competition and to addressing shared challenges from non-market economies," a joint US-UK statement said.

The deal comes as both parties look to curb China's rising economic influence. “To more effectively address the challenge posed by non-market economies, such as China, the parties will explore concrete ways to intensify their cooperation" in areas including information sharing and investments, the statement added.

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