EU agrifood sector rejoices at five-year trade truce with US

Joe Biden, Ursula von der Leyen and Charles Michel before the EU-US summit on 15 June. [EU/BENDO]

Agri-food stakeholders and policymakers have welcomed the extension of the retaliatory tariff reprieve with the United States for another five years, as well as the steps taken to end the civil aircraft dispute that has disproportionately affected the sector.

On Tuesday (15 June), the EU and the US agreed to suspend the application of retaliatory tariffs stemming from WTO disputes over government subsidies to aircraft manufacturers Airbus and Boeing.

The punitive tariffs affected both sides for a total value of $11.5 billion of trade, which led EU and US business to pay more than $3.3 billion in duties.

The decision came after an initial four-month suspension agreed in March, seen as the first step in settling the trade war with the US that has soured transatlantic relations in recent years.

Farming chiefs meeting signals thaw after EU-US trade row

A meeting between EU Agriculture Commissioner Janusz Wojciechowski and US agriculture secretary Tom Vilsack showed the first signs of thawing relations after the trade dispute that has soured transatlantic relations in recent years.

According to the trade Commissioner Valdis Dombrovskis, the new truce is an attempt to ground the Airbus-Boeing dispute for good, saving “time and space to find a lasting solution through our new Working Group on Aircraft, while saving billions of euros in duties for importers on both sides of the Atlantic.”

In October 2019, the US announced punitive tariffs on EU agri-food products after the World Trade Organisation (WTO) ruled in their favour over EU subsidies for the European aircraft manufacturer Airbus.

The tariffs were enacted in March 2020, concerning imports of EU products worth a total of €6.8 billion and ranging from Italian cheeses to French wines and Scotch whisky.

In retaliation, the EU has been imposing customs duties on $4 billion of American exports since the beginning of November, but Dombrovskis pointed out that European countries were not escalating the row but simply mirroring the US approach.

New US duties became effective at the beginning of 2021, including tariffs on new types of alcoholic drinks from the Airbus-producing nations – France, Germany, Spain, and the United Kingdom.

Joe Biden’s election as US president has been hailed as a new hope for the struggling transatlantic relations as Brussels expected his new administration to take a step back from Trump’s hardline trade stance on trade.

The first olive branch from the EU side came in the form of a smaller trade deal to remove EU tariffs on US lobsters, which has been interpreted as a gesture of goodwill to Biden.

On the very day of Biden’s inauguration in Washington on 20 January, European lawmakers urged the European Commission to settle for good the trade dispute.

In a letter sent to trade Commissioner Valdis Dombrovskis on the day of Joe Biden’s inauguration, the chair of the European Parliament’s agriculture committee, Norbert Lins, asked the European Commission on behalf of the majority of political groups “to intervene directly” in the dispute.

MEPs wink at Biden, call for ending US tariff spat

On the very day of Joe Biden’s inauguration in Washington on 20 January, European lawmakers urged the European Commission to settle for good the trade dispute with the US that has soured transatlantic relations in recent years.

Commenting on the new agreement, Lins said it is a very good sign for transatlantic cooperation and farmers across the Atlantic.

“It gives them hope that in the future, they can export their high-quality products without fear that they would be hit hard by sanctions imposed due to trade dispute in a completely different sector,” he added.

For French MEP Anne Sanders, the EU and the US must find a solution within the WTO framework to definitively settle this conflict and find an effective and long-lasting solution.

EU farmers association COPA-COGECA also welcomed the “wind of change” in the EU-US trade relations, hoping for a permanent solution that would avoid having agriculture pay a high price for a conflict they are not involved in.

Likewise, Europe’s food manufacturers lobby group, FoodDrinkEurope, encouraged both sides to maintain the current positive momentum and spirit of cooperation to permanently remove retaliatory tariffs on agri-food products, and strengthen transatlantic relations.

In the latest agrifood trade monitoring by the European Commission, the EU-27 agrifood export values to the US fell by 7% in January-February 2021 mostly due to an important drop in the sale of wine (-€141 million), beer (-€55 m), soft drinks and waters (-€47 m).

[Edited by Zoran Radosavljevic]

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