May 17, 2020

UK's freight association calls for fuel duty freeze

Supply Chain
Freddie Pierce
3 min
Freeze on fuel duty?
In the UK, The Freight Transport Association (FTA) has written to the Chancellor of the Exchequer George Osborne ahead of his Autumn Statement on Decem...

In the UK, The Freight Transport Association (FTA) has written to the Chancellor of the Exchequer George Osborne ahead of his Autumn Statement on December 5, asking him to confirm his commitment to freeze fuel duty until 2015 in order to stimulate economic growth and give businesses confidence to invest in the future.

The FTA say that Osborne has shown a continuous reluctance to increase fuel duty, and in his speech to the Conservative party conference in September he said that he wanted to freeze fuel duty for the rest of this Parliament. However, this came with the significant caveat "provided we can find the savings to pay for it."

Theo de Pencier, FTA's Chief Executive, said: "While we appreciate the difficult trading and fiscal conditions that persist, and the constraints which these impose, we have written to the Chancellor urging him to confirm his commitment to freeze fuel duty until 2015. We believe that such a step would provide just the kind of stability needed to give businesses the confidence to invest in the future - but he can go even further."

FTA and its partners in the FairFuelUK Campaign have extensively briefed the Treasury on the economic benefits of a reduction in fuel duty. Two studies – the first by the Centre for Economics and Business Research and the second (on the Treasury's recommendation) by the National Institute for Economic and Social Research - have shown that a change of approach could deliver significant benefits, including creating jobs, boosting GDP, and in some circumstances, delivering a net increase in tax revenues. The modelling shows the effects to be optimised at a reduction of 3ppl - this is the amount by which FTA has urged the Chancellor to reduce fuel duty.

The FTA say the Chancellor could go still further by announcing an extension of the existing policy of fixing duty rates for road fuel gases relative to diesel rates to at least the next 10 years, and by introducing incentives for low emissions truck technologies via the capital allowances system. This would provide confidence for operators considering investment in these lower emission heavy goods vehicles. The association has also made a strong case for the reinstatement of the duty differential for used cooking oil as a bio-fuel in commercial vehicles.

FTA has also taken the opportunity, with the introduction of the HGV Road User Levy from April 2014, to underline that it is vital for VED rates for heavy goods vehicles to be set at levels which ensure no additional costs will apply to UK operators once the Levy is introduced.

De Pencier added: "When the Chancellor delivers his Autumn Statement on 5 December, he must take the steps needed to ease the burden of fuel duty and help hard working families and the countless businesses that rely on road transport to deliver their goods and services."

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Jun 16, 2021

EU and US agree end to Airbus-Boeing supply chain tariffs

3 min
Supply chains embroiled in Airbus-Boeing dispute will no longer be impacted by $11.5bn tariffs imposed on food and beverage, aircraft and tobacco

The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic. 

Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years. 

It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC. 

The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn. 

In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products. 

Boeing-Airbus dispute by the numbers  

  • The dispute began in 2004
  • Tariffs suspended for 5 years 
  • $11.5bn worth of goods affected by tariffs
  • $3.3bn in duties paid by businesses to date 
  • 15% levy on aircraft and 25% on non-aircraft goods suspended

Both sides welcome end to tariffs 

European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.

“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.

Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”. 

The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."

This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.

Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”

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