Government welcomes 'fresh start' as EU-US tariffs suspended

This announcement mirrors the announcement made regarding the EU and UK yesterday
Government welcomes 'fresh start' as EU-US tariffs suspended

Following a call between EU Commission President Ursula von der Leyen and new US President Joe Biden it was agreed to suspend the tariffs as part of a 'fresh start'. Picture: AP Photo/Olivier Matthys

The Government has warmly welcomed the suspension of tariffs between the European Union and the United States, announced Friday evening.

It is good news for several Irish sectors including the dairy and aircraft leasing industries who have been heavily impacted by the introduction and escalation of tariffs during the presidency of Donald Trump.

Following a call between EU Commission President Ursula von der Leyen and new US President Joe Biden it was agreed to suspend the tariffs as part of a “fresh start”.

The EU and US have been engaged in a long-running dispute since 2004 regarding subsidies and supports provided to their civilian commercial aircraft manufacturers, Airbus in the EU and Boeing in the US.

Following the call, President von der Leyen said: “I was glad to speak to President Biden this afternoon – the first of many exchanges and the start of a good personal partnership.

“As a symbol of this fresh start, President Biden and I agreed to suspend all our tariffs imposed in the context of the Airbus-Boeing disputes, both on aircraft and non-aircraft products, for an initial period of four months.

“We both committed to focus on resolving our aircraft disputes, based on the work of our respective trade representatives. This is excellent news for businesses and industries on both sides of the Atlantic, and a very positive signal for our economic cooperation in the years to come,” she said.

In May 2018, the World Trade Organisation found that Airbus was receiving unfair subsidies and a WTO Arbitrator in October 2019 ruled that the US was entitled to take countermeasures against the EU, including the UK, to a total not exceeding $7.4 billion annually.

The US tariff list included aircraft, agri-food and other industrial products exported by the EU. 

An additional tariff of 10% was imposed on aircraft products exported from the EU and a 25% tariff on food, drink and other imports.

The goods listed for new US tariffs indicated that the total value of Irish exports to the US, subject to additional tariffs of 25%, was valued at €366m.

The single Irish product most impacted by the US measures is liqueurs (e.g. Irish Cream). In 2018, Ireland recorded €168.5 million in sales of liqueurs, €157 million of butter and €37 million of cheese products in the US.

Then in March 2019, the WTO found that US subsidies to Boeing, continued to cause severe damage to Airbus' market opportunities, notably in the form of lost sales.

A WTO Arbitrator in October 2020 ruled that the EU was entitled to take countermeasures against the US to a total not exceeding $3.9 billion annually. 

The tariff rates selected by the EU to apply to US imports mirrored the tariff rates applied by the US to EU goods; 15% on aircraft and 25% on everything else.

The Department of Enterprise said that due to Ireland’s large aircraft leasing sector, Ireland was heavily impacted by EU tariffs on imports of US Aircraft, though the EU Commission stated that only new Boeing aircraft would be subject to the measures.

As part of deescalating the Civil Aviation Trade Disputes and to create space and momentum for ultimate settlement, the US and EU have announced the suspension of tariffs on both sides.

This announcement mirrors the announcement made regarding the EU and UK yesterday.

Reacting to the news, Tánaiste and Minister for Enterprise, Leo Varadkar said it is really welcome.

“It will provide great relief to both our exporters and importers that have been negatively impacted by the tariffs, particularly our exporters of quality goods like Irish cream liqueur, butter and cheese and our importers of animal feedstuff.

“This de-escalation is something that I have advocated strongly for in the EU Council of Trade Ministers. Ireland is committed to free and open trade. It is what allowed us to rebuild after the financial crisis and it will be crucial as we recover from the pandemic,” he said.

“Ireland has always maintained a very-strong and warm relationship with the United States and that includes our trade relationship. 

"This decision is an early sign of both the EU and US hitting the ‘reset’ button on their trade relationship. 

"I hope both parties use this time now to meaningfully engage with each other so that we can resolve this dispute once and for all,” he added.

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