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Yesterday, the European Union implemented its eighth round of sanctions on Russia in response to Russia’s claimed annexation of Ukrainian territory.  This latest package includes expanded import and export restrictions, an initial implementation of an EU price cap on the transport of Russian seaborne oil, an expansion of restrictions on non-government controlled regions of Ukraine…

The WTO has given final approval for the EU to impose tariffs on at least $4 billion of U.S. goods in retaliation over illegal aid in connection with the Boeing/Airbus aircraft dispute.  The EU has set a target date of November 10, 2020 to impose tariffs, regardless of the outcome of the U.S. presidential election.  Press accounts indicate the EU Commission has given EU member states until November 3 to provide input on the targeted products.

While the U.S. and the EU have indicated general support for a settlement of the 16-year aircraft dispute, the two sides continue to disagree on settlement terms.  The EU has urged the U.S. to remove tariffs over EU subsidies to Airbus because it has repealed those programs, while the U.S. contends that since it has already removed the subsidies to Boeing, there is no legitimate basis for EU retaliation.  It seems unlikely the parties will reach a settlement by the November 10, 2020 deadline.  The EU has stated that it will move forward with the tariffs if there is no settlement by November 10, 2020. …
Continue Reading EU Targets November 10 for Imposition of Nearly $4 Billion in Tariffs on U.S. Goods in Aircraft Case

Last Friday the United States Trade Representative (USTR) ramped up its tariffs on European aircraft, increasing the duty from 10% to 15%, effective March 18.

It also announced it would make minor modifications to 25% tariffs imposed on cheese, wine, Irish and Scotch whisky, and other non-aircraft products from the EU, namely adding a 25% tax on French and German butcher and kitchen knives and dropping prune juice from the list of taxed items. While the move is hard-hitting, particularly for European aircraft, EU officials had feared more drastic measures in an increasingly fraught trade relationship with the U.S.

Background

The tariffs are part of a 15-year-old complaint over European aircraft subsidies to plane maker Airbus, putting Boeing, its U.S. competitor, at a disadvantage. Last October, the World Trade Organization authorized the U.S. to impose tariffs of up to 100% on 7.5 billion dollars’ worth of EU exports annually to recoup its losses. The imposed duties are lower than those permitted under WTO’s ruling, however, USTR decided against additional escalation after a mid-December public consultation recorded protestations from more than 26,000 U.S. consumers and industries. While USTR’s latest action on tariffs thus could have been significantly more painful, businesses hoping for a relief remain disappointed with the levies, which are expected to continue until the U.S. and EU come to a negotiated resolution. As the two sides cannot agree on terms for starting talks, this remains an uncertainty at least in the short-term.

Potential for Escalation

Further escalation by Washington also is anticipated if Brussels hits U.S. imports with tariffs over unfair subsidies to Boeing. The WTO is expected to rule this spring on damages caused by U.S. plane maker’s state tax breaks, which would authorize the EU to target U.S. goods with retaliatory tariffs. A preliminary list of U.S. goods proposed as targets for EU retaliatory tariffs was drawn up last year, focusing primarily on U.S. farm products. Although Brussels no doubt is mulling over a right response to the most recent U.S. tariff hikes on aircraft, the broader picture for the EU remains to reset its trade relations with the U.S.

Impact on EU-US Trade Agreement

At the beginning of the year, European Commission President Ursula von der Leyen announced that she is seeking a mini trade deal with the U.S. in the next few weeks covering trade, technology and energy. However, the U.S. insists any deal must include EU agricultural concessions – a sticky and politically explosive topic for the EU. EU officials have conceded agricultural concessions could come in the shape of separate commitments lowering EU non-tariff barriers for certain U.S. farm goods. It has been suggested this could include the approval of more genetically modified crops for sale in the bloc, which is of obvious interest to the U.S.
Continue Reading U.S. increases tariffs on European aircraft: EU response a litmus test for transatlantic trade relations

Those attempting to track the meandering Brexit trail in the three years since the referendum which decided that the United Kingdom (UK) would leave the European Union (EU) are well aware that the general election on 12 December most likely will determine the path forward. What that might mean for the cannabis market in the…

The World Trade Organization’s (WTO) dispute settlement process risks collapse by the end of this year as the United States continues to block appointments to the WTO Appellate Body. Once the terms of two of the three remaining WTO Appellate Body Members expire on 10 December 2019, the WTO’s appeals court no longer will possess…

The ongoing WTO aircraft subsidy disputes, resulting in both EU and U.S. retaliatory tariff announcements, and the failing EU-U.S. trade agreement negotiations certainly have strained trade relations. Nevertheless, there appears to be some hope of reaching a trade deal before the end of the European Commission’s term in October. As currently outlined, the trade agreement…

On 28 June 2019, the European Union and the South American customs union Mercosur (Brazil, Argentina, Paraguay, and Uruguay) struck a sweeping trade agreement covering almost 100 billion dollars’ worth of bilateral trade annually. Twenty years in the making, with stop-start trade negotiations having started in 1999, the EU-Mercosur political agreement is considered by the negotiating parties on both sides as a significant achievement. However, the terms of the deal – which have been published in draft individual chapters as both sides undertake a legal review of the text –  have elicited sharp criticism.

The European Commission characterises the accord as its most lucrative to date, saving businesses about 4 billion euros ($4.55 billion) in tariffs on exports, quadruple the amount achieved on its trade deal with Japan. For Mercosur, this would be its first deep trade agreement, which could spur economic growth in the region and strengthen Mercosur’s ability to compete in international markets. The Commission therefore has been quick to defend the deal, highlighting that it includes strong provisions on environmental protection and promotes sustainable development, notably by insisting that both parties maintain commitments and engagement under the Paris climate change agreement. EU Agriculture Commissioner Phil Hogan has been particularly vocal in support of the deal, underscoring that while including some trade-offs, it opens up new markets for EU agricultural producers and protects European food standards. While Irish Prime Minister Leo Varadkar has stated that he would not vote for the deal if it runs contrary to Ireland’s interests, Varadkar recently agreed to Hogan staying on in the next European Commission term, thereby positioning him to continue his strong advocacy in support of the agreement.

EU parliamentarians, several EU Member States and lobby groups, on the other hand, have decried the EU-Mercosur agreement as being detrimental for the environment, food safety and the EU’s agricultural sector. Surrounded by protesting Irish farmers, on 11 July, …
Continue Reading Challenges ahead for European Commission in pushing through EU-Mercosur trade deal

Last April, the United States Trade Representative (“USTR”) initiated an investigation to enforce U.S. rights stemming from a World Trade Organization (“WTO”) ruling concerning the European Union’s (“EU”) provision of illegal subsidies on the manufacture of large civil aircraft.

In the notice initiating that investigation, USTR proposed imposing additional ad valorem duties of up to…

Results of the European elections held in the UK on 23 May resulted in a significant defeat for the ruling Conservative party and a win for the Brexit Party, a single issue political group seeking for the UK to withdraw from the European Union. Several contenders, including former Foreign Secretary Boris Johnson, are taking a hard-line approach to Brexit and have pledged that under their leadership the UK will leave the EU with or without a deal on Brexit day. Other candidates, such as Environment Secretary Michael Gove and Home Secretary Sajid Javid, promise to unite Brexiteers and Remainers and “deliver Brexit”. Whomever succeeds May will inherit a daunting task. For business, the latest developments mean prolonged uncertainty and an increased fear of an abrupt departure from the EU with trade on World Trade Organization terms.

In an attempt to create a majority in the UK Parliament to ratify the withdrawal agreement she negotiated with the EU, Prime Minister May intended to made certain concessions. Among them was the idea of negotiating a new and separate customs union with the EU that would take effect when the UK is no longer part of the EU internal market. The Brexit Party rejects this proposal and it may not be tenable for the next Conservative Party leader. Nevertheless, pressure to avoid a hemorrhaging hard Brexit, may yet result in further consideration of a separate customs union with the EU. It is useful then to consider what a customs union without single market access and EU membership might look like and how it could affect business.…

Continue Reading Bespoke UK-EU Customs Union: Still a Viable Option?