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          New trade war looms over EU/US relations

          The past few days have seen significant escalation in the trade tensions between the European Union ("EU") and the United States ("U.S.") as a result of the never-ending Airbus-Boeing dispute over subsidies.

          Date: 23/04/2019

          The U.S. list of goods subject to additional customs duties

          In an unexpected move on April 8 2019, the Office of the United States Trade Representative ("USTR") published a preliminary list of EU products which are proposed to be targeted with additional import duties following an investigation under Section 301 of the Trade Act 1974 (here is the official USTR press release).

          The list comes in retaliation to the failure from the EU to comply with rulings from the WTO Dispute Settlement Body ("DSB") in the EU-U.S. Airbus-Boeing WTO dispute - one of the most complex cases ever handled by the WTO judiciary.  Both the U.S. and the EU have sued each other in relation to illegal subsidies granted by each party to Boeing and Airbus respectively.  Both parties obtained partially favourable rulings from the WTO DSB but failed to implement the adverse decisions.

          The U.S. list includes a wide variety of goods from from either the countries where Airbus has operations (France, Germany, Spain and the United Kingdom) or the EU as a whole.  Some major categories are: (a) fishery products; (b) cheese and dairy products; (c) olive oil and olives; (d) fruit; (e) wines and alcoholic beverages; (f) fashion and apparel goods; (g) ceramic; (h) motorcycles; (i) certain ferrous and non-ferrous metals; and (j) helicopters, aicrafts and parts thereof.

          USTR has calculated the list to be worth around USD11 billion in trade and has proposed the imposition of additional ad valorem duties of up to 100% for the goods contained therein.  The final list of goods subject to duties and their amounts will be determined based on the findings of a WTO arbitrator, whose opinion we expect for summer 2019.

           

          The EU list of goods subject to additional customs duties

          On 17 April 2019, the European Commission published a list of U.S. products to be subject to additional customs duties as counter-retaliation to the USTR's threatened measures.  The list is worth around USD20 billion of U.S. exports to EU and covers merchandise like: (a) frozen fish; (b) fruit; (c) wines and alcoholic beverages; (d) tomato ketchup; (e) tobacco; (f) chemicals; (g) handbags; and (h) tractors.  Contrary to the U.S., the EU has not disclosed the proposed level of additional duties.

          While the European Commission formally links the list to the U.S. failure to comply with the adverse Airbus/Boeing WTO DSB decision, the EU has accelerated the disclosure of its retaliation following the USTR's hard stance (here is the official European Commission press release).

           

          Opportunity to make representation before USTR and the European Commission

          Both U.S. and EU law allow interested parties such as exporters, importers, users and trade associations to comment on the retaliation lists with a view of seeking exclusions of certain products.

          The US process will unfold in accordance with the below schedule:

          • May 6, 2019: Due date for submission of requests to appear at the public hearing and summary of testimony.
          • May 15, 2019: The Section 301 Committee will convene a public hearing in the Main Hearing Room of the U.S. International Trade Commission, 500 E Street SW Washington DC 20436 beginning at 9:30 am.
          • May 28, 2019: Due date for submission of written comments, including post-hearing rebuttal comments.

          Interested parties will have to comment on any aspect of the proposed action, including:

          • The specific products to be subject to increased duties, including whether products listed should be retained or removed, or whether products not currently on the list should be added;
          • The level of the increase, if any, in the rate of duty.
          • The appropriate aggregate level of trade to be covered by additional duties.
          • Whether increased duties on particular products might have an adverse effect upon U.S. stakeholders, including small businesses and consumers.

          The EU also gives the opportunity to interested parties to lodge comments on the products for which additional duties might be imposed not later than by 31 May 2019, at 12:00 am (UTC+01:00) and in accordance with the instructions set in a European Commission notice.

           

          Please reach out to Vassilis Akritidis, Lorenzo Di Masi or Florentine Sneij for more information,

          Related people

          Vassilis Akritidis

          • Partner // Head of WTO & International Trade