From Department of Enterprise, Trade and Employment
The Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar TD and Minister of State for Trade Promotion Robert Troy TD have this evening welcomed the announcement made by the EU Commission and the United States regarding the suspension of tariff measures by both sides in relation to the long-running civilian aircraft trade dispute.
The Tánaiste Leo Varadkar said:
"This evening’s news that the EU and US
have agreed to mutually suspend their respective tariffs in relation to the aircraft trade dispute, to allow talks to happen, is really welcome. It will provide great relief to both our exporters and importers that have been negatively impacted by the tariffs, particularly our exporters of quality goods like Irish cream liqueur, butter and cheese and our importers of animal feedstuff."This de-escalation is something that I have advocated strongly for in the EU Council of Trade Ministers. Ireland is committed to free and open trade. It is what allowed us to rebuild after the financial crisis and it will be crucial as we recover from the pandemic.
"Ireland has always maintained a very strong and warm relationship with the United States and that includes our trade relationship. This decision is an early sign of both the EU and US hitting the ‘reset’ button on their trade relationship. I hope both parties use this time now to meaningfully engage with each other so that we can resolve this dispute once and for all."
Commenting on the announcement, Minister Robert Troy added:
"As a Member State not party to the issues at the heart of the dispute, Ireland was caught in the crosshairs in regard to the tariff measures imposed by both the EU and US. Ireland has been a champion of the EU’s approach in seeking a mutually agreed settlement to this dispute as we know the damaging consequences punitive tariffs can have on a trader’s competitiveness.
"Livelihoods on both sides of the Atlantic can be severely impacted by barriers to trade and therefore this announcement is hopefully a timely boost to affected industries and businesses including our SMEs that have built a reputation for developing quality Irish goods for the US market."
Notes
The EU and US have been engaged in a long running dispute (since 2004) regarding subsidies and supports provided to their civilian commercial aircraft manufacturers, Airbus in the EU and Boeing in the US.
In May 2018, the WTO Appellate Body found that Airbus was receiving unfair subsidies and a WTO Arbitrator in October 2019 ruled that the US was entitled to take countermeasures against the EU, including the UK to a total not exceeding $7.4 billion annually. The US tariff list included Aircraft, Agri-food and other industrial products exported by the EU. An additional tariff of 10% was imposed on aircraft products exported from the EU and a 25% tariff on food, drink and other imports.
The goods listed for new US tariffs indicated that the total value of Irish exports to the US, subject to additional tariffs of 25% was valued at €366m. The single Irish product most impacted by the US measures is liqueurs (e.g. Irish Cream). In 2018, Ireland recorded:
€168.5 million in sales of liqueurs
€157 million of butter
€37 million of cheese products
In March 2019, the WTO Appellate Body found that US subsidies to Boeing, continued to cause severe damage to Airbus' market opportunities, notably in the form of lost sales. A WTO Arbitrator in October 2020 ruled that the EU was entitled to take countermeasures against the US to a total not exceeding $3.9 billion annually. The tariff rates selected by the EU would apply to US imports mirrored the tariff rates applied by the US to EU goods; 15% on aircraft and 25% on everything else. Due to Ireland’s large aircraft leasing sector, Ireland was heavily impacted by EU tariffs on imports of US Aircraft, though the EU Commission stated that only new Boeing aircraft would be subject to the measures. The main non-aircraft products impacted by the measures (mainly material used in animal feedstuffs) were:
Vegetable Saps and Extracts: €22.7 million
Cane Molasses: €4 million
Beet-Pulp: €3.5 million
Essential Oils: €1.9 million
As part of deescalating the Civil Aviation Trade Disputes and to create space and momentum for ultimate settlement, the US and EU have announced the suspension of tariffs on both sides. This announcement mirrors the announcement made regarding the EU and UK yesterday (4 March 2021).
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