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May 30, 2022 View:

EU and US suspend retaliatory tariffs on exports

The European Commission's official website recently issued a press release stating that the European Union and the United States agreed today to suspend retaliatory tariffs on EU and U.S. exports for a period of four months. This suspension allows both sides to focus on resolving this long-standing dispute.

Image courtesy of: FX168 Financial News Service

This is an important boost for EU exporters, as the U.S. has been authorized to raise tariffs on $7.5 billion of EU exports. Similarly, the EU will suspend tariffs on about $4 billion worth of U.S. exports to the EU.

This is an important step forward," said European Commission Executive Vice-President and Trade Commissioner Dombrovskis. It marks a fresh start with our largest and most economically important partnership. At a time when the epidemic is hurting our workers and our economy, lifting these tariffs is a win-win for both sides. Such a pause would help restore confidence and trust, which would give us the space to negotiate a comprehensive and lasting solution. A positive U.S.-European trade relationship is important not only for both sides, but for global trade as a whole.

These tariffs will be suspended for four months on both sides once the parties complete their internal procedures.

According to the report, the dispute between the EU and the U.S. over subsidies in the aviation industry has been going on for 17 years. in 2004, the U.S. filed a lawsuit with the WTO, accusing the EU of providing illegal subsidies to Airbus in various forms, and the EU subsequently filed a lawsuit with the WTO against the U.S. government for providing illegal subsidies to Boeing.

In October 2019, the WTO ruled that the EU illegally subsidized Airbus, authorizing the U.S. to impose punitive tariffs on $7.5 billion worth of EU goods annually, and subsequently, the U.S. began imposing tariffs on Airbus aircraft from the EU, as well as wine, cheese, and other products. on October 26, 2020, the WTO ruled again that the EU could impose $4 billion in annual punitive tariffs on the U.S. in retaliation for illegal U.S. subsidies to Boeing.

All U.S. tariffs on $7.5 billion of EU imports and all EU tariffs on $4 billion of U.S. products will be suspended for four months, Europe and the United States said in a joint statement, according to Reuters. This will allow the EU and the U.S. to ease the burden on the industries and workers involved and focus on resolving these long-standing disputes at the WTO, the statement said.

The statement also asserted that the EU and the US are committed to reaching a comprehensive and lasting negotiated solution to the aircraft (subsidies) dispute. Key elements of the program will include addressing the trade-distorting practices and challenges posed by new entrants from non-market economies like China.

Officials said the suspension of those tariffs was announced after a phone call between Biden and European Commission President von der Leyen on May 5, Reuters said.

The White House statement mentioned that Biden emphasized his support for the EU and his commitment to fixing and revitalizing the U.S.-European partnership. And von der Leyen called the agreement excellent news for business and industry on both sides of the Atlantic and a very positive sign for economic cooperation in the years to come.

As a symbol of this new beginning, President Biden and I agreed to suspend, for an initial period of four months, all tariffs we have imposed as a result of the Airbus-Boeing dispute, including tariffs on aircraft and non-aircraft products, according to the full text of the statement posted on the European Commission's website.

We are both committed to building on the work of our respective trade representatives and focusing on resolving our dispute over the aircraft. This is excellent news for businesses and industries on both sides of the Atlantic and is a very positive sign for our economic cooperation in the years ahead.

Then Farges, president of the Bordeaux Wine Association (CIVB), said the following day that the suspension of U.S. tariffs on European wines was good news for the wine industry, which would allow France to regain its market share in the United States. Industry insiders said that Bordeaux wine sales fell by up to 100 million euros in 2020 due to U.S. taxes, and the entire French wine industry lost 400 million euros in sales.