Washington Insider-- Tuesday

Tariff Talks Between the U.S. and EU

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.



USDA's Agricultural Marketing Service (AMS) Monday published a notice in the Federal Register that extends the comment period for 30 days relative to its request for comments on Supply Chains for the Production of Agricultural Commodities and Food Products.

AMS published the request April 21 and sought public comments by May 21. But based on requests from stakeholders and organizations for "additional time to provide thoughtful and thorough feedback to this request."

Specifically, AMS said it received requests from "representatives of critical supply chain activities whose comments would be of great value." Comments are now due June 21.

It is not surprising that USDA is allowing more time for comments since their request was very broad -- supply chains for the production of ag commodities and food products. That cuts a very wide swath and USDA asked for comments on any aspects of that, including which current programs and policies could be deployed on that front.



The U.S. International Trade Commission (USITC) on May 14 unanimously voted to continue the investigation into the import of organic soymeal from India.

The USITC said there is a "reasonable indication that a U.S. industry is materially injured by reason of imports of organic soybean meal from India that are allegedly subsidized and sold in the United States at less than fair value."

The U.S. Department of Commerce will continue its investigations of imports of organic soybean meal from India, with its preliminary countervailing duty determination due on or about June 24, 2021, and its preliminary antidumping duty determination due on or about September 7, 2021.

The USITC will issue a report after June 14 on views of the agency and information it gathered during the investigation.



The use of tariffs as a trade tool is one that has been around for decades and so, too, has the concept of pausing those tariffs.

The Biden administration touted the four-month suspension of tariffs in the long running disputes over large civil aircraft between the U.S. and the European Union (EU) and the U.S. and UK.

The U.S. tariffs against the EU and UK were imposed by the Trump administration with the backing of the WTO. The U.S. had successfully challenged the subsidies provided to Airbus by certain EU countries. As is usually the case, the WTO scaled back the level of tariffs that the U.S. could impose.

There was a delay in the EU putting retaliatory tariffs in place after they also won a WTO ruling against subsidies they maintained were provided to Boeing.

The underlying dispute over large civil aircraft dates back some 16 years. It took until early 2020 for the U.S. to be able to hit the EU with tariffs.

The EU followed up later in 2020 which prompted another response from the U.S. to broaden the level of tariffs.

Then in March this year, the U.S. and EU and separately the U.S. and UK announced a four-month suspension in tariffs as they try to reach a solution in the long-running disputes.

Last week, U.S. Trade Representative Katherine Tai said she fully expected the four-month period would result in a solution. Considering that we are now halfway through the four-month cease fire, that could be an optimistic statement by Tai. After all, some argue that outside of the tariffs, there would really not be a reason for the parties involved to actually resolve the disputes given the length of time where a deal could have been reached.

Others still argue that perhaps the "fresh" look at the disputes by the Biden administration might just be enough to push the issue to the finish line.

And now there is another tariff suspension that has popped up, this time the EU pledging now to impose higher tariffs on a host of U.S. goods as a response to U.S. Section 232 tariffs on imports of steel and aluminum.

USTR Tai did not give any hint that a suspension was potentially in the cards from the EU when she testified to House and Senate panels last week. And lawmakers raised the issue of those higher tariffs that loomed as of June 1.

But these are not the first uses of suspensions of tariffs. Recall that China hit U.S. agricultural products with tariffs in response to U.S. Section 301 tariffs against China that hit a host of products. But, China itself suspended those tariffs last year as they sought to boost imports of U.S. goods, purchases that were outlined in the Phase One agreement between the U.S. and China.

So it is clear that tariffs have been used in trade actions, but so have suspensions of tariffs as countries seek to achieve a certain goal or at least cool tensions to allow officials to negotiate in earnest to figure out solutions.

We will see. The use of tariffs is not likely going away and there is no sign the U.S. is ready to pull back tariffs imposed by China. But ag interests should watch the situation closely as tariff suspensions can at least provide some relief and could set the stage for trade resolutions or successes, Washington Insider believes.


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