EU agrees to eliminate tariffs on US lobster

EU agrees to eliminate tariffs on US lobster

The EU will eliminate tariffs on imported US lobster as part of a narrow accord with the Trump administration aimed at improving the two powers’ turbulent trade relations. 

In a co-ordinated announcement, Brussels and Washington said the EU would ditch tariffs on live and frozen lobsters imported from the US, in exchange for the US halving tariffs on a range of EU manufactured products, including glassware and ceramics, disposable lighters and some prepared meals containing fish. 

The move marks the first negotiated tariff reduction between the two sides in more than 20 years. But it is small in the context of the two large economies, covering imports and exports worth an aggregate of less than $300m depending on the year. US live lobsters have faced an 8 per cent duty in the bloc.

In offering concessions on the lobster industry, which has been championed by US president Donald Trump, the EU is hoping to unlock broader trade benefits in areas of greater economic impact, including aerospace, where the two sides have been stuck in a long-running dispute over state support.

“We intend for this package of tariff reductions to mark just the beginning of a process that will lead to additional agreements that create more free, fair, and reciprocal transatlantic trade,” said Robert Lighthizer, the US trade representative, and EU trade commissioner Phil Hogan in a joint statement. 

Resolution to Boeing-Airbus is the big prize here

Lobster duties have been a persistent irritant in US-EU trade relations. Earlier this year Mr Trump complained about the EU’s ability to import Canadian lobsters duty-free thanks to the Canadian-EU trade agreement, which has been in force since 2017. China separately placed retaliatory tariffs of 25 per cent on US lobsters in 2018 amid the US-China trade war. 

Under the agreement, the EU will scrap tariffs on imports of US live and frozen lobster products. Sales of the crustaceans into the EU were over $111m in 2017, although they have since dropped steeply as European consumers switch to tariff-free Canadian products.

The tariffs will be removed according to “most-favoured nation rules”, which means they will be dropped for all of Europe’s trading partners, retroactive to August 1. The change will be for a period of five years, subject to the approval of the European Parliament and the Council, but the European Commission will commence a process to make it permanent, according to an announcement. 

In return, the US will cut by 50 per cent its tariff rates on certain products exported by the EU worth an average annual value of $160m, including certain prepared meals, certain crystal glassware, propellant powders and cigarette lighters. This will also be retroactive to the beginning of the month.

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Mr Trump has complained that Europe has been “almost as bad over the years as China in terms of trade”. He has repeatedly threatened tariffs on European cars and auto parts since he took office, even if he has not yet followed through. 

The EU is in particular seeking to defuse the long-running dispute over state support for aircraft giants Airbus and Boeing, which has seen the US put levies of 25 per cent on a range of British and European goods. “Resolution to Boeing-Airbus is the big prize here — we have been pushing intensively,” said one EU official. 

Last week, the US made minor changes to the list of European products subject to tariffs, sparking some relief in Brussels given their modest scope.

Mr Hogan said at the time that the commission took note of the US decision “not to exacerbate the ongoing aircraft dispute”, adding: “I will continue my engagement with Robert Lighthizer. A resolution of the aircraft dispute should be our focus.” 

Mr Lighthizer said last Wednesday the US would “begin a new process” of trying to come to a long-term agreement over aircraft subsidies with the EU. A World Trade Organization decision due later this summer is expected to decide the scope of EU retaliation against the US for its state support to Boeing.