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21 May 2018 EU counters US safeguard measures with possible imposition of significant import duties on various US products On 17 May 2018, the European Commission (the Commission) issued Commission Implementing Regulation (EU) 2018/724, allowing the European Union (EU) to suspend the World Trade Organization (WTO) concessions on import tariffs for imports of certain US goods. Should the US apply import duty safeguard measures against imports of EU goods into the US, the Commission will apply additional ad valorem customs duties as of 20 June 2018 on the import of various US goods into the EU. This first stage of duties will apply at a rate of 25% and are imposed on the imports of goods from the US with CN Codes listed in Annex 1 of the Regulation. From 23 March 2021, the second stage of ad valorem duties may apply on the products in Annex II, ranging from 10% to a maximum of 50%. On 8 March 2018, US President Trump announced a tariff increase on imports into the US of certain steel and aluminum products. These safeguard measures became effective on 23 March 2018, but the US provided an exemption until 1 June 2018 for EU products pending further negotiation.1 To date no agreement has been reached. According to the Commission, the US measures are contradictory to the concessions and obligations resulting from the WTO Agreement and the preceding General Agreement on Tariffs and Trade (GATT). As such, the WTO Agreement on Safeguards allows the suspension by a WTO member affected by the safeguard measures of another WTO member of the application of substantially equivalent concessions, once consultations between these two parties have failed. As the consultations have not been successful, the EU has the right to impose commercial policy measures consisting of the suspension of the tariff concessions laid down in the WTO Agreement and the imposition of additional import duties on US products. The EU measures may be exercised as long as, and to the extent that, the US applies or re-applies its safeguard measures in a manner that would affect products from the EU. If the US does not extend the exemption of the safeguard measures for EU products, the EU measures of imposing additional duties on US products may become applicable. According to the Regulation, the EU will be allowed to apply additional import duties on certain US products by a separate implementing act, should the US apply or re-apply its safeguard measures in a manner that would affect EU products. The EU measures will then consist of two stages:
Products listed in the Annexes to the EU Regulation, for which an import license with an exemption from or a reduction of duty has been issued prior to 17 May 2018, shall not be subject to additional duties. Also, affected products that have been exported from the US to be imported into the EU prior to this date, shall not be subject to additional import duties. Businesses involved in US-EU trade will want to carefully review the EU list of targeted items against their EU import data. Those who may be negatively impacted by the additional EU duties, if applied, may want to prepare for a contingency. This includes manufacturers, distributors, importers and consumers, who should map their complete, end-to-end supply chain to fully understand the extent of products impacted, potential costs, alternative sourcing options, and to assess any opportunities to mitigate impact, such as customs valuation planning. 1 See EY Global Tax Alert, United States: Exemption of tariffs on steel and aluminum products reached for some countries – others extended until 1 June, dated 1 May 2018.
Document ID: 2018-5675 |
