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Frustration for UK pork sector as US 'Airbus' tariffs remain

20th Aug 2020 / By Alistair Driver

The UK pork sector will continue to face high tariffs on pork exports to the US, but might lose out on possible ‘rebalancing’ tariffs on US imports as the long-running trade dispute takes some new twists and turns.

Liz TrussInternational Trade Secretary Liz Truss received a further reminder of the challenge she faces in securing a good trade deal with the US after a recent visit to Washington to try and secure some relief in the Airbus-Boeing dispute. Beyond the removal of tariffs on sweet biscuits, she didn’t get it.

UK pork exporters have faced damaging tariffs of 25% on US pork exports since October 2019 when the WTO authorised the US to impose tariffs of up to 100% on $7.5bn worth of a wide range of EU products.

The tariffs were approved as retaliatory measures against the EU as part of the ongoing 15-year legal battle at the WTO over Airbus/Boeing subsidies and the subsequent failure of the EU to comply with a WTO ruling against government subsidies for Airbus.

The majority of tariffs are aimed at Airbus founding countries – the UK, France, Germany and Spain - although many do extend beyond those four countries across the majority of the EU27 (+UK).

US law requires the US Trade Representative (USTR) to review the tariffs after four months and then every six months. The latest revisions, which will come into force on September 1, were minimal.

The key changes relating to agrifood include:

  • The 25% US tariff currently applied on exports of sweet biscuits, including shortbread, will be removed for the UK.
  • The 25% tariff currently applied to pork products, now including bone-in to close the previous loop hole, remains alongside the same rate on certain cheeses, butter and Scotch Whisky. The the US could have raised the tariff, however, so it could have been worse.
  • The US will impose a 25% tariff on imports of raspberry, strawberry, apricot, cherry, peach and other jams from France and Germany

After her visit to Washington to meet US Trade Representative Robert Lighthizer and other key members of the US Administration and Congress, Ms Truss welcomed the decision to lift tariffs on shortbread.

But she expressed disappointment that the announcement does not address tariffs on goods like single malt Scotch whisky. “These tariffs damage industry and livelihoods on both sides of the Atlantic and are in nobody’s interests. I am therefore stepping up talks with the US to remove them as soon as possible,” she said.

Boeing ruling

In another twist, the WTO has ruled that the subsidies the US gave to Boeing were also illegal, despite US claims to the contrary.

The UK Department for International Trade therefore expects an announcement within the next two months from the WTO on the value of the retaliation the EU is able to apply on the US in terms of tariffs. The EU has clearly indicated it will respond by applying tariffs on US exports.

It is hoped, therefore, that once the Boeing award is made there will be some rebalancing of tariffs. While the Boeing award is not expected to be as large as that awarded to the US in compensation for Airbus, the USTR has indicated it will be willing to negotiate with the EU.

But the end of the Brexit transition period at the start of next year further complicates matters. According to the NFU, any tariffs applied to the UK as a result of the Airbus dispute will remain because, as an Airbus founding member, the UK is a named party in the dispute. However, the UK is not a named party in the Boeing dispute, raising questions as to whether the UK will benefit from the tariffs on US products applied after this ruling.

The UK is using the FTA negotiations between it and the US as a platform to request the removal of tariffs, but with few tangible results so far.

NPA view

NPA chief executive Zoe Davies said the tariffs were damaging for the UK industry at a time when it is seeking to grow global trade.

“While the US market is not big, it is valuable as the products supplied by some of our major processors tend to be ‘high end’. It is disappointing that the tariffs, which affect our ability to compete, remain.

“The situation must be resolved if there is to be a US-UK trade deal, particularly as it appears the UK won’t benefit from the balancing Boeing ruling, giving us a weaker negotiating position.”