EU-US trade war - what Irish firms should do
21 April 2019
Carol Lynch, Partner, Customs and International Trade Services, contributes to The Sunday Business Post discussing what steps companies should take in light of recent trade talks between the EU and the US.
The US and EU have been involved in long-running trade wars since early 2018. This started with the US imposing additional customs duties of 25% and 10% on imports of European steel and aluminium. The EU responded, adding additional 25% customs duties on traditional US imports into the EU such as jeans, whiskey and peanut butter.
This didn’t significantly affect Irish exporters or importers. However, the new clash between the two is of a lot more concerning.
The dispute centres around allegations of subsidies being provided to Boeing (by the US) and Airbus (by the EU). Both sides claim these are tax breaks and both have successfully taken their cases to the World Trade Organisation. Both are now waiting an arbitrators report on the extend of the damage.
In preparation the US have issued a provisional list of EU imports on which they intend to impose significant additional customs duties. The US plan to target up to $11bn of EU products and the list covers a range of typical Irish exports such as fish and seafood, butter and cheese.
In retaliation, the EU last Wednesday published their list of products where they will look to impose additional duties. This 11-page document and affects a vast range of agri-food products (from frozen to citrus fruits to ketchup) along with chemicals and wine.
Importers and exporters, already facing the uncertainty and potential cost increases of Brexit, could therefore now be facing competitive restrictions on their ability to sell into, and buy from, one of our next biggest markets.
Irish exporters in particular are seriously concerned as to how this will affect their US sales as it will significantly increase the sales price of their products on the US market.
This comes at a time when the EU and US have launched trade talks to reduce tariffs and barriers, and certainly won’t help negotiations.
In this context what should companies do?
- Check the US list and EU list to see if your products are included.
- Lobby to have your goods removed from the lists. The lists are currently provisional, with the US consultation process lasting until May 28 and the EU consultation process lasting until May 31.
- Contact the Department of Business, Enterprise and Innovation (DBEI). The DBEI is strongly advising businesses with significant exports/imports to/from the US to contact it, as well as the US Trade Representative (USTR) and/or EU Commission.
- Confirm the tariff classifications of your products to ensure they are correct, as the product lists are based on tariff classifications.
- Check your contracts to determine who is responsible for the import duties in either jurisdiction. This will be based on the terms of sale agreed. For example if you have agreed a “delivered” (DDP) price to the US you, as the exporter, will be responsible for paying any additional duties to US Customs.