Daily Management Review

United States And European Union Strike Mini Trade Deal


United States And European Union Strike Mini Trade Deal
A so called mini trade deal worth a total of $200 million between the United States and the European Union was announced on Friday. According to the deal, there will be a reduction in tariffs on a small range of products – which includes lobsters from the US.
This however was a sign of easing of tensions between the two traditional trading partners.
The issues of aircraft subsidies as well as the imposition of punitive tariffs on EU steel and aluminum by US President Donald Trump have been the bone of contention between the two parties.
The mini trade deal was announced by the two parties in a joint statement.  
β€œThe importance of the deal is that it has unleashed positive results elsewhere,” an EU official said.
Import tariffs of 8%-12% on lobsters form the US will be removed by the EU while duties on imports of certain glassware, ceramics, disposable lighters and prepared meals form eh EU will be halved by the US according to the deal.
The lowered and removed tariffs will apply to all WTO members in order to comply with World Trade Organization rules. Te parties however said that products have been so chosen so that maximum the mutual benefits is provided.
Based on 2019 trade figures, the value of the whole deal is about 168 million euros. In 2019, about 42 million euros of US lobsters was imported by the EU while it exported products worth about 126 million euros to the US. There is an apparent mismatch in the imports from the two parties because the US will only be reducing current tariffs by 50 per cent while EU will be removing all tariffs of the goods decided under the deal.
For Trump, tariffs on lobsters have been a big concern which had prompted him to issue threats of tariffs on Europe and China over lobster duties.
Repeated calls for aid for the lobster industry have been given by lawmakers from Maine. The industry provides livelihood of 4,500 state-licensed lobstermen and an additional 10,000 people.
Following a trade deal between Canada and the EU in which the tariffs on Canadian lobsters were removed, US exports of lobsters to the EU had suffered and according to US Senator Angus King, the latest mini trade agreement with the EU would help create a level playing field for US producers. The collapse of sales of lobsters to restaurants because of the coronavirus-related lockdowns and the Chinese tariffs imposed in 2018 also hurt the US industry.
EU governments and the European Parliament will now have to ratify the trade agreement which is expected to be completed within the next few weeks.
After the US won a WTO case over EU subsidies given to planemaker Airbus, Washington has imposed tariffs on $7.5 billion worth of EU goods that includes Scottish whisky, French wine and European cheese.