EU reacts to US measures and imposes additional duties on certain goods originating in the US
Global Trade News Alert – 16-2018
As a reaction to the expiry of the European Union’s (EU) temporary exemption from United States (US) trade measures on steel and aluminium on 1 June 2018, certain products originating in the US and imported into the EU may be subject to additional duties from 20 June 2018.
13 June 2018
As a reaction to the expiry of the European Union’s (EU) temporary exemption from United States (US) trade measures on steel and aluminium on 1 June 2018, certain products originating in the US and imported into the EU may be subject to additional duties from 20 June 2018 (see Commission Implementing Regulation (EU) 2018/724, Annexes I and II, for the lists of potentially impacted goods).
Notwithstanding the US’s characterisation of its measures on steel and aluminium as national security measures, the EU considers them to be safeguards. The EU, therefore, will rely on its ability under World Trade Organisation (WTO) rules to rebalance the situation by targeting a list of US products with additional duties. Such countermeasures will come into effect unless the US changes its policy or the WTO Council for Trade in Goods disapproves the countermeasures. Also, the effective date of imposition of additional duties may be delayed from 20 June 2018 to the beginning of July due to the EU’s internal procedure of coordinating with Member States.
On 16 May 2018, the EU had notified the WTO of the proposed suspension of concessions on various products originating in the US, which would be applied in two phases:
- In the first phase, additional duties of 25% will be levied from 20 June 2018 on goods identified in Annex I, including iron and steel products, certain agricultural goods and prepared foods, orange juice, whiskey, tobacco, cosmetics, clothes, certain motorcycles, and motorboats. The goods listed in Annex I represent up to EUR 2.8 billion of trade in goods with the US.
- In a second phase, additional duties ranging from 10% to 50% will be applied on a wider range of products detailed in Annex II from 23 March 2021.
What does this mean for you?
If your business imports into the EU any of the products covered by the first phase of the countermeasures, your business may soon be faced with additional duties of 25% upon their importation into the EU.
The EU will apply such additional duties as long as, and to the extent that, the US applies or re-applies its alleged safeguard measures on steel and aluminium in a manner that affects products from the EU. In this respect, the possibility of reducing the list of products exists and is subject to the US Administration’s decision on possible exemptions. However, the current state of affairs led the European Commission to formally endorse the full list of US products as notified to the WTO.
What to do?
If you are an EU importer of US origin goods set forth in Annex I of Commission Implementing Regulation (EU) 2018/724, you should assess the potential impact of the countermeasures on your business and consider potential ways to manage the impacts, including reviewing your tariff classifications, customs valuations, supply chain sourcing, and usage of duty deferral programs.
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