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U.S. and the European Union Agree to Certain Tariff Reductions

Posted August 26, 2020


Last week, the United States and the European Union agreed to tariff reductions on several products aimed at improving trade relations that have been fraught by disputes involving the Trump administration’s Section 232 duties on aluminum and steel products and retaliatory actions associated with a long-running World Trade Organization dispute concerning large commercial aircraft.
European currencies and lobster

In a joint statement, USTR Robert Lighthizer and EU Trade Commissioner Phil Hogan said the European Union would drop tariffs on live and frozen lobsters imported from the U.S. in exchange for the U.S. halving tariffs on a range of EU manufactured products, including glassware and ceramics, propellant powders, disposable lighters and some prepared meals containing fish. 

The tariffs will be removed according to Most-Favoured Nation rules, meaning they will be dropped for all of Europe’s trading partners, retroactive to August 1. The change will be for a period of five years, subject to the approval of the European Parliament and the Council, but the European Commission has indicated it intends to make the reductions permanent.

The breakthrough marks the first negotiated tariff reduction between the two sides in more than 20 years but totals less than $300 million, a negligible amount in the context of the $800 billion two way trade between the U.S. and EU.

In making concessions on lobsters, which faced tariffs ranging from 8% to 20% depending on product form, and had been a particularly irksome matter to President Trump who has complained about Maine’s fishermen losing out to competing duty-free lobsters from Canada, the EU hopes the move will lead to progress in areas of greater economic impact, including aerospace, where the two sides have long been engaged in a bitter dispute over government subsidies.

“We intend for this package of tariff reductions to mark just the beginning of a process that will lead to additional agreements that create more free, fair, and reciprocal transatlantic trade,” said the joint statement.

That echoed a sentiment expressed earlier in the week by USTR Lighthizer about renewing talks aimed at eventually reaching a long-term agreement over aircraft subsidies with the EU. A WTO decision due later this summer is expected to decide the scope of EU retaliation against the U.S. for its state support to Boeing. 

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