US, EU suspend Airbus-Boeing feud, tariffs on wine, spirits, tractors, cheese

President Biden today, June 15, announced the end of a 17-year dispute with the European Union over aircraft subsidies for Boeing and Airbus and the continuation of a suspension of tariffs on a range of products including wine, tractors, spirits, molasses and cheese.

In a briefing for reporters, Trade Representative KatherineTai said that both sides had agreed to extend a suspension of tariffs for another five years while working together to counter China’s investment in the aircraft sector, The New York Times reported.

House Ways and Means Committee Chairman Richard Neal, D-Mass., said in a news release, “I commend Ambassador Tai and the Biden administration for resolving one of the longest trade disputes in U.S. history in a manner that delivers for American workers and businesses. This agreement creates an opportunity for the United States and the EU to work cooperatively to confront China’s non-market practices in the aerospace sector and beyond.

“Today’s announcement marks a critical, positive turning point in the U.S.-EU transatlantic relationship. I look forward to partnering with the administration as it works to rebuild our alliances and tackle issues of common concern including forced labor, climate change, and unfair trading practices,” Neal said.

The U.S. Dairy Export Council and National Milk Producers Federation welcomed the breakthrough while also urging that further steps be taken by the EU to ensure that food and agricultural trade is not upended in the months to come.

“The bilateral commitment announced at the U.S.-EU Leaders Summit to resolve the aircraft disputes can help to normalize trade in sectors that have been harmed by retaliatory tariffs, but more work remains to get U.S.-EU trade relations on the right path,” said Krysta Harden, USDEC president and CEO. “The U.S. needs a holistic approach to Europe’s continued attempts to disrupt international trade so that our exporters have a dependable and more reasonable playing field on which to compete.”

“U.S. exporters continually have to chase new mandates by the European Union to retain our current access, even when there are no safety concerns with American dairy products,” said Jim Mulhern, NMPF president and CEO. “Too often dairy trade with the EU is a one-way street. The EU’s frequent approach to import requirements is to mandate prescriptive procedures that U.S. dairy exporters need to make time-consuming changes in order to conform just to retain access to that market for our safe products. The products we export today are entirely safe; new EU mandates that would seek to force the U.S. to change our regulatory system match theirs would do nothing to enhance that.”

NMPF and USDEC had praised a letter from U.S. House members to EU Ambassador to the U.S. Stavros Lambrinidis, calling on the EU to delay implementation of new and excessive dairy certification requirements until U.S. and EU negotiators can reach a mutually agreed solution.

Chris Swonger, president and CEO of the Distilled Spirits Council (DISCUS), said, “The five-year suspension of these tariffs on distilled spirits is happening at a critical time for the U.S. hospitality industry” and added that “lifting this tariff burden will support the recovery of restaurants, bars and small craft distilleries across that country that were forced to shut down their businesses during the pandemic.”

“Under today’s agreement, the EU will suspend for five years the 25% tariffs on U.S. rum, brandy and vodka imposed in November 2020. In return, the U.S. will suspend for five years the 25% tariffs on liqueurs and cordials from Germany, Ireland, Italy and Spain imposed in October 2019, and on certain Cognacs and other grape brandies from France and Germany imposed in January 2021,” Swonger said.

But he added that the EU and the United Kingdom continue to impose a 25% tariff on American Whiskeys as part of the steel and aluminum trade dispute, which has severely damaged what had been for many years a great American export success story.

Swonger said, “Until steps are taken to permanently remove these tariffs on American Whiskeys, the United States’ largest spirits export category will remain at a serious competitive disadvantage in our two most important export markets.

“American Whiskey exports to the EU, our largest export market, grew from $502 million in 2008 to $702 million in 2018, an increase of 40%. Since the tariffs were imposed, our American Whiskey exports to the EU have declined by 37% and to the UK by 53%.

“Today’s announcement is an important building block to reset the bilateral relationship, and we urge the administration to build on this positive momentum. We are committed to working with the Biden administration to help secure the removal of the EU and UK’s tariffs on American Whiskeys,” Swonger added. “It is critical to secure a return to the zero-for-zero tariff agreement on distilled spirits, which has been instrumental to our export success and job creation on both sides of the Atlantic since 1997.”

Today, the U.S. and EU agreed on a five-year suspension of all retaliatory tariffs stemming from WTO disputes over government subsidies to aircraft manufacturers Airbus and Boeing. The goal: In the next five years, both sides reach a negotiated and permanent solution while easing the burden on the sectors on both sides of the Atlantic, which are being harmed by the retaliatory tariffs.

Copa, the umbrella organization of European Union farm groups, and Coega, the umbrella for European farm co-ops, encouraged U.S. and EU leaders “to use this period to find a permanent solution while avoiding causing agriculture to pay a high-price for a conflict they are not involved in.”

Pekka Pesonen, secretary-general of Copa-Cogeca, said, “Today we feel the wind of change in EU-U.S. trade relations, and this is good news for the farming community. Still, the Airbus-Boeing debacle is not the only trade friction between both partners. There is a risk for a similar development in the framework of the digital tax. I also cannot forget that Spanish black olive producers still have to face a 35% import tax as a result of a decision by the U.S. administration in 2018. We hope that what happened today will be a stepping stone towards strengthening transatlantic cooperation and the international rules-based trading framework.”


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