As relations between the US and the European Union have been marred by lingering trade disputes over the past few years, a mini deal announced on Friday is suggested as offering some respite in the transatlantic standoff, reported CNBC.
The executive branch of the EU, the European Commission, has agreed to scrap tariffs on US frozen and live lobster throughout the next five years, in a deal which has yet to be approved by other European institutions.
In return, the US will slash duties on a spate of EU goods by 50 percent, including crystal glassware and prepared meals.
Subsequently, the agreement might take on a more permanent nature.
“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 the two chief negotiators, US Trade Representative Robert Lighthizer and Commissioner Phil Hogan, in a joint-statement.
The reported deal is groundbreaking in that it is the first time in more than 20 years that the two sides have decided to cut tariffs.
“The Commission and the US see this agreement as a good basis and first step for further improving EU-US trade relations,” a spokesperson for the European Commission was cited as saying.
The spokesperson hinted that in potential further talks, the deal might open the door to Friday’s deal and could pave the way for an agreement over aircraft subsidies.
“The package builds on both sides’ commitment to find a negotiated solution for the longstanding aircraft dispute,” said the spokesperson.
Lingering Trade Friction
The trade industry has been struggling since President Donald Trump was elected in 2016 and subsequently targeted the EU bloc over perceived unfair trade practices and threatening to impose duties on European carmakers.
The war of tariffs between the US and European Union broke out in March 2018, when Trump imposed 25 percent tariffs on steel and 10 percent tariffs on aluminium from most countries, extending this to the European Union, Canada, and Mexico in June of that year. Europe responded with counter-tariffs on a number of US goods.
The two sides have been locked in a 16-year trade battle over state aid for Airbus and US rival Boeing, after the US complained in 2004 that the UK, Germany, France, and Spain were giving huge subsidies to Airbus.
Both challenged one another’s subsidies to Airbus and Boeing.
In 2011, the World Trade Organisation (WTO) ruled that Airbus had received $18 billion in subsidies from the EU between 1968 and 2006.
The WTO gave the US permission in 2019 to apply $7.5 billion in tariffs on industrial and agricultural products from those countries, including cheese, wines, whiskey, and other goods.
While Washington has already slapped tariffs on European products, the EU is anticipating a WTO decision, due later this summer, pertaining to the scope for retaliation, reports the publication.
Although the recent announcement on the reached mini-deal allows the two sides to push forward in an effort to overcome the impasse over aircraft subsidies, experts suggest hopes for a wider trade deal are quite limited.
“There won’t be much happening in transatlantic trade until next year, and what will happen then depends entirely on the next president,” Fredrik Erixon, director of the European Centre of International Political Economy (ECIPE), was cited as saying by CNBC Monday.
“If President Trump is re-elected, I fear we will have more friction and more protectionism between the EU and the US,” he added.