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Additional Duties on Large Number of US Products Imported into the EU to Begin Applying in July This Year

On 6 June 2018, as part of the EU's response to the US tariffs on steel and aluminium products, the European Commission’s 28 highest ranking officials (the so-called “College of Commissioners”) endorsed a decision to impose additional duties on the full list of US products that was notified to the WTO.

Following the go-ahead to apply additional duties to selected imports from the US, the Commission expects to conclude the relevant procedure, in coordination with Member States, before the end of June this year, so that the new duties will start to apply in July.

Hong Kong traders will recall that on 8 March 2018, the US adopted safeguard measures in the form of a tariff increase on imports of certain steel and aluminium products (at rates of 25% and 10%, respectively), effective from 23 March 2018 and with an unlimited duration. The effective date of the tariff increase with respect to the European Union was deferred to 1 May and subsequently to 1 June 2018. The EU contends that, notwithstanding the US’s characterisation of these measures as security measures, they are safeguard measures.

The application of what is being termed as the “rebalancing of duties” is, according to a Commission announcement, fully in line with WTO rules, and corresponds to a list of products previously notified to the WTO. The WTO Safeguards Agreement allows for a “rebalancing”, corresponding to the damage caused by the US measures with EU exports said to be worth €6.4 billion (in 2017) being affected.

The EU is, therefore, said to be exercising its rights by retaliating against US products that have been valued at up to €2.8 billion of trade. The remaining rebalancing on trade, valued at €3.6 billion, will take place at a later stage, namely, in three years’ time or after a positive finding via the WTO dispute settlement procedure if that should come sooner.

The US-origin products to bear the brunt of the rebalancing duties starting in July include sweetcorn, rice, orange juice, whiskey, tobacco, certain cosmetics, a variety of clothing items, steel products, certain household articles, motorcycles, sailboats and playing cards. Please click on the following for the full list which was circulated at the WTO on 18 May 2018.

The EU’s Commissioner for Trade, Cecilia Malmström, commented that the decision taken by the College is a “measured and proportionate response to the unilateral and illegal decision taken by the United States to impose tariffs on European steel and aluminium exports.” According to her, “the United States left us with no other option than to safeguard EU interests.

The imposition of rebalancing duties on the list of selected US products is said to be part of the multi-pronged response outlined by the European Commission. Such response includes:

  • the launch of legal proceedings against the US at the WTO on 1 June 2018;
  • the possible triggering of safeguard action so as to protect the EU market from disruptions caused by the diversion of steel from the US market. In relation to this, Hong Kong traders will recall that an investigation was launched on 26 March 2018. If the investigation confirms the necessity for swift action, such a decision could be taken as early as this summer;
  • As regards aluminium, the Commission has put in place a surveillance system for imports of aluminium to be prepared in case action is required in the aluminium sector.

Earlier this year, on 7 March, the College of Commissioners had decided that the European Commission should continue engaging with the US on other trade-related processes. Thereafter, a trilateral meeting with the US and Japan took place on 31 May in Paris, during which progress was made to address some of what are felt to be the root causes of the current tensions in the trading system, including mainland China's alleged trade-distorting practices.

Content provided by Picture: HKTDC Research
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