EU Suspend Plans to Raise Tariffs on U.S. Whiskey, Other Goods
May 17 2021 - 9:52AM
Dow Jones News
By Josh Zumbrun
WASHINGTON -- The European Union on Monday agreed to postpone
plans to raise tariffs on American whiskeys, motorcycles, boats and
other items set to take effect June 1 as it begins talks with the
Biden administration aimed at lifting U.S. steel tariffs.
In a joint statement, the U.S. and EU said they would begin
formal discussions to address problems plaguing the global steel
and aluminum industry, and "agreed to chart a path" toward
resolving the dispute that led to tariffs.
They said the talks would include discussions on how
overproduction in China depresses prices and threatens the
viability of domestic metal producers.
"The United States and EU Member States are allies and partners,
sharing similar national security interests as democratic, market
economies," said the joint statement released Monday from the
European Union's trade directorate, the Office of the U.S. Trade
Representative, which is President Biden's top trade agency, and
the Commerce Department.
The U.S. and EU "can partner to promote high standards, address
shared concerns, and hold countries like China that support
trade-distorting policies to account," the statement said.
The EU's tariffs pending for June would have hit about $4
billion in U.S. exports to Europe. They were first announced three
years ago, when the Trump administration imposed global tariffs on
steel and aluminum. The EU retaliated at the time and scheduled
further retaliation to begin in June of this year if no progress
was made at resolving the trade spat between Brussels and
Washington.
The suspension of tariffs was quickly greeted with relief from
American exporters who were poised to be affected, including U.S.
whiskey makers.
"Distillers across the United States are breathing a huge sigh
of relief after bracing for a 50% tariff on American Whiskeys in
just a matter of days that would have forced many craft distillers
out of the EU market," said Chris Swonger, the president of the
Distilled Spirits Council, a trade group.
The Trump administration's steel and aluminum tariffs and the
European Union's retaliation have been a major sticking point in
trans-Atlantic trade relationships in the three years since the
tariffs were imposed.
In imposing the tariffs, the Trump administration had used trade
authorities under Section 232 of the Trade Expansion Act of 1962.
It was the first time since 1983 that the U.S. had imposed tariffs
under the law, and so symbolized a break with a decadeslong period
in which U.S. trade policy had worked to lower tariff barriers.
In order to impose tariffs, the U.S. had to declare that such
imports threatened U.S. national security, a claim that riled
officials in Brussels and other capitals such as Ottawa and Mexico
City, which viewed themselves as close security allies of the
U.S.
While Canada and Mexico eventually negotiated the removal of the
tariffs as part of agreeing to a new U.S.-Mexico-Canada trade
agreement, the European Union had no success getting the Trump
administration to drop the tariffs.
"The EU is not a national security threat to the U.S.," said
Valdis Dombrovskis, the European Union's trade commissioner. "But
the distortions created by global excess capacity -- driven largely
by third parties -- pose a serious threat to the market-oriented EU
and U.S. steel and aluminum industries and the workers in those
industries."
For now, the U.S. tariffs on steel and aluminum remain in place,
as does the European's first round of retaliatory tariffs from
three years ago. No specific action to do anything about
overcapacity in China's steel and aluminum industry was
announced.
The U.S. and EU said they are "committed to engaging in these
discussions expeditiously to find solutions before the end of the
year."
Despite a de-escalation, finding a solution to the issue that
satisfies both trade partners, as well as the domestic steel and
aluminum industries could be difficult. The U.S. steel industry has
strongly supported the tariffs.
Mr. Biden's top advisers on the issue -- U.S. Trade
Representative Katherine Tai and Commerce Secretary Gina Raimondo
-- have both said they believe the tariffs helped save American
jobs. Those statements set a high bar for removing the tariffs
without taking other steps to bolster the industry.
Kevin Dempsey, president of the American Iron and Steel
Institute, which represents U.S. manufacturers and supports the
tariffs, said that his organization is "grateful for the
administration's commitment to addressing this crisis." Mr. Dempsey
added that "to be successful, the bilateral discussions must take
into account that, while China is the single largest source of
global steel oversupply, subsidies and other market distorting
policies in many countries are contributing to the overcapacity
crisis."
"Injurious surges in imports have come from every region of the
world," Mr. Dempsey said.
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com
(END) Dow Jones Newswires
May 17, 2021 09:37 ET (13:37 GMT)
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