When two economies as large as the U.S. and Europe rub up against one another, it’s bound to create friction. And the departure of the United Kingdom from the European Union only added confusion. But now with Brexit in the rearview mirror and a new U.S. Administration, we’re starting to see tentative steps to reduce tensions. For example, US quotas on imports of European agricultural products have finally, after two years of negotiation, been adjusted to reflect Britain’s departure from the EU, with the UK retaining a portion of the quotas based on recent trade flows. Reducing uncertainty in this area that covers billions of dollars in trade in beef, poultry, rice, dairy products, fruits, vegetable, wine and others is a good step forward.
Similarly, both the U.S. and the EU (and now the UK in its own right) have legitimate concerns about government supports for the aerospace industry (specifically Boeing and Airbus) – and the World Trade Organization has authorized each party to impose ‘retaliatory tariffs’ to recover damages (totaling nearly $12 billion)– which have hit products from Kentucky Bourbon to French handbags. However, on March 4, the U.S. and the UK agreed to suspend these retaliatory tariffs for four months, followed by a similar agreement between the U.S. and the EU on March 5. Parties on all sides have indicated that the ‘pause’ is intended to provide space to negotiate a settlement to the long-running dispute, all the more important now given the damage done to the civil aircraft sector by the Coronavirus.
There are so many areas where we need to have frank and principled discussions with the EU on trade policy – from trade in services to digital taxation to agricultural and environmental standards and so many other areas. But given the importance of that trade to both partners (and to EACC member companies), it is good to see this incremental movement and we hope that it leads to more positive developments.