EU releases draft mandates for trade talks with U.S.
Date: Monday, January 21, 2019
Source: American Shipper
Agriculture is excluded from the draft mandates on industrial goods tariffs and conformity assessment.
“We are not proposing any negotiations with the U.S. to reduce or eliminate tariffs on agriculture products,” EU Trade Commissioner Cecilia Malmstrom saying during a press conference Friday.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, on Wednesday told reporters that it’s expected that trade agreements address agriculture in order to earn Senate approval.
Trade Promotion Authority legislation sets agriculture as a principal objective for the U.S. in trade agreement negotiations, and requires the White House to consult with Congress throughout such talks.
The European Commission on Friday submitted the draft mandates to EU member states, which must approve the proposals before formal trade agreement negotiations with the U.S. can start, the commission said in a press release.
The two draft mandates separately address removal of tariffs on industrial goods and “conformity assessment,” the latter of which aims to make it easier for companies to demonstrate their products meet technical requirements in the U.S. and EU, the commission said.
Elimination of duplication of testing, inspection, and certification requirements could reduce costs for companies seeking access to the U.S. or EU, the conformity assessment draft mandate said.
“In case of mandatory third-party conformity assessment (approximately 70 percent of cases in the U.S.), enabling exporters to seek certification in the country of export of products to prove compliance with the applicable rules in the country of importation can facilitate trade,” the draft mandate said.
The possibility currently exists only for certain sectors under a 1998 bilateral mutual recognition agreement, which doesn’t properly function for all covered sectors, making conformity assessment costs significant for EU exports in key sectors like machinery and equipment, the draft mandate said.
As for the mandate associated with industrial goods, the goal of negotiations is to eliminate all tariffs on both sides of the Atlantic, with a “substantial elimination of tariffs upon entry into force and a phasing out of such tariffs in a short time frame,” according to the mandate.
The mandate defines industrial goods as all goods other than those in Annex I of the World Trade Organization Agreement on Agriculture.
The simple average applied most-favored nation tariff rates on non-agricultural products are 4.2 percent in the EU and 3.1 percent in the U.S., rates that are relatively low but whose elimination would have an “important impact” in both areas, because of the “sheer size” of the partners’ trade relationship, the mandate noted.
The U.S. and EU share a $5 trillion relationship in annual investment and trade.
The EU industrial goods mandate notes the EU’s readiness to take into account potential U.S. sensitivities for certain automotive products, and Malmstrom during the press conference said the EU is willing to put its vehicle tariffs on the negotiating table if the U.S. agrees to work toward zero tariffs for all industrial goods.
She noted that U.S. negotiating objectives for a trade agreement with the EU didn’t designate automobiles for exclusion, despite a joint statement from a July meeting between President Donald Trump and European Commission President Jean-Claude Juncker indicating that talks wouldn’t cover autos.
"If there are sensitive individual products here, like pickups, I’m sure that negotiators can find a solution,” Malmstrom said.
The Office of the U.S. Trade Representative didn’t respond to requests for comment.