U.S. and UK Temporarily Suspend WTO Retaliatory Tariffs on Large Civilian Aircraft

On March 4, 2021, the United States and the United Kingdom released a joint statement announcing a suspension of World Trade Organization (WTO)-authorized retaliatory tariffs in the WTO’s longest-running trade dispute involving government subsidies for large civilian aircraft.  The statement notes that the UK ceased applying retaliatory tariffs on January 1, 2021, and that the U.S. will suspend its retaliatory tariffs on March 4, 2021.  Both parties agreed to suspend their retaliatory tariffs for a period of four months, until July 4, 2021.  These moves are an effort to “de-escalate the issue and create space for a negotiated settlement to the Airbus and Boeing disputes.”  The Office of the U.S. Trade Representative (USTR) hopes that this temporary suspension will allow time to settle the dispute and then begin to seriously address “the challenges posed by new entrants to the civil aviation market from non-market economies, such as China.”  The UK’s Department for International Trade stated that it will “continue to engage with the U.S. to agree [to] a fair settlement to the dispute, that removes punitive tariffs” but reserved the right to re-impose these tariffs “if satisfactory progress towards an agreeable settlement is not made.”

In this dispute, the WTO Dispute Settlement Body has authorized the EU to impose $4 billion in retaliatory tariffs annually on U.S. products, and authorized the United States to impose $7.49 billion in retaliatory tariffs annually on EU products. This agreement between the United States and the United Kingdom addresses only the suspension of retaliatory tariffs on trade between the two countries; the U.S. retaliatory tariffs on EU goods from Germany, France and Spain and the EU’s retaliatory tariffs on U.S. goods remain in place.

For additional background on this dispute and the resulting retaliatory tariffs regarding EU subsidies to Airbus and U.S. subsidies to Boeing, see SmarTrade Updates of October 4, 2019, December 9, 2019, February 17, 2020, August 13, 2020, October 15, 2020 and November 11, 2020