To promote a free trade agreement with the US, Britain is lifting special EU tariffs on US goods. Because the agreement with the United States is important for the independence of the British.

In order for Britain to negotiate a free trade agreement with the US, London has removed special tariffs imposed by the EU on US products. This move shows that the UK is serious about reaching an agreement with the US, the British government said. “We want to reduce this conflict and reach a negotiated solution so that we can deepen our trade relations with the United States and draw a line,” said International Trade Minister Liz Truss. The derogation will apply from January 1, 2021.

Independence from the EU

For the UK, a free trade agreement with the US would be extremely important in the face of Brexit. Otherwise, the rules of the World Trade Organization (WTO) apply to bilateral trade, some of which provide for high tariffs. As an independent trading nation, according to Truss, Britain again has the ability to shape tariffs according to its own economic interests and thus to benefit the British economy. The talks are still going on.

The UK’s goal is clear: after leaving the EU, they want to be more independent from the European Union. “The size of the EU suggests that in future negotiations it will have the upper hand over a medium-sized trading power like Britain,” said Holger Schmieding, chief economist at Berenberg Bank.

For the UK economy, the EU is by far the most important trading partner. According to calculations by the Ifo Institute, Britain handled 50 percent of its imports and 47 percent of its exports with EU countries last year. In September, Truss said that future trade relations would focus more on the fastest growing regions and countries.

Boeing, Airbus, whiskey

The London government reserves the right to reintroduce the special tariffs if there is no progress in negotiations with the United States, the Commerce Department said. In addition, tariffs imposed by the EU in response to special US levies on steel and aluminum imports were maintained.

The special EU tariffs in the case of Boeing affect US exports of food and beverages such as tomato sauce, walnuts, rum and vodka, but also video game consoles, tractors, wheel loaders and airplanes.

The EU had raised the special charges approved by the World Trade Organization (WTO) for illegal subsidies for the US aircraft manufacturer Boeing. The United States had previously imposed special rates on European aircraft manufacturer Airbus, including Scotch whiskey, due to unauthorized subsidies. As a result, whiskey exports to the US collapsed by 30 percent.

“We are working on it”

Negotiations on a trade agreement are still ongoing with the EU. At the moment, it appears that the talks have stalled. “There is still the possibility of an agreement, we are continuing to work on it,” Chancellor Angela Merkel said today in the Bundestag. However, if conditions on the British side are unacceptable, the EU is also ready to go “a path without a withdrawal agreement”.

WTO rules would then also apply in relations with the EU. “That would amount to a blow to the British economy,” says Dirk Steffen, head of Deutsche Bank’s capital markets strategy department. According to the expert, the shock would likely only last for a comparatively short period. The expected devaluation of the pound sterling would benefit the exporting companies of Great Britain.

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