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EU Gives Trump the Gift of Lobster in Trade Deal

BLOOMBERG, AUGUST 21, 2020

By Jonathan Stearns for Bloomberg – President Donald Trump won a European Union pledge to end tariffs on American lobster as part of a deal that may help him and a Republican senator politically in a state hammered by the U.S. trade war against China.

The move should provide some relief to some 10,000 fishermen and support crew in Maine, where lobster is a $500 million industry annually.

China, which was the second-largest importer of U.S. lobsters, imposed a 25% retaliatory duty on the product and decimated American exports.

In return for the EU tariff relief on lobster, the U.S. agreed to cut by 50% its levies on a handful of European goods including crystal glassware, cigarette lighters, prepared meals and propellant powders. Both sides stressed the possibility of the deal being a stepping stone to a broader improvement in frayed transatlantic commercial ties.

“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,” U.S. Trade Representative Robert Lighthizer and his EU counterpart, Phil Hogan, said in a joint statement on Friday.

The statement said the deal marked the first time in more than two decades the two partners had negotiated tariff reductions.

The total value of the accord is around $200 million, according to the European Commission, the EU’s executive arm in Brussels. In 2019, the U.S. shipped 42 million euros ($49.5 million) of lobster to the EU and the bloc’s exports of the goods slated to win the lower American levies totaled 126 million euros, the commission said.

Canada’s Gain

In their joint statement, Lighthizer and Hogan cited trade data from 2017 when U.S. lobster exports to the EU were worth more than $111 million. American shipments of the seafood to Europe dropped after the entry into force in September 2017 of a free-trade accord between the EU and Canada, which has won market share in the bloc at the expense of American fishermen.

Maine’s Susan Collins is considered one of the most vulnerable incumbent GOP senators in the November election. Collins has trailed Democratic nominee Sara Gideon in recent polls, including a five-point margin among likely voters in a recent Bangor Daily News poll.

Under Friday’s deal, the EU will eliminate its tariffs on American lobster for five years with retroactive effect from this month and start preparations to make the move permanent.

The agreement still needs the backing of EU governments and the European Parliament.

Woman in red dress. Susan Collins.
Susan Collins
Photographer: Al Drago/Bloomberg

The U.S. has linked the EU-championed goal of slashing industrial tariffs to greater American access to the European food market — a non-starter for Brussels to date.

With the announcement, the two sides are trying to show incremental headway on industrial tariffs — one facet of a relationship marred by disagreements over several larger issues. As the U.S. and China spent the past two years slapping tariffs on some $500 billion in bilateral trade, the U.S. and the 27-nation EU have launched a few salvos while avoiding an all-out confrontation.

Steel Tariffs

Trump imposed a 25% import tax on European steel in 2018 and as recently as June he repeated a threat to put tariffs on EU cars by citing the bloc’s lobster duties, which range from 6% to 16% depending on the product type. U.S. automotive levies would devastate German manufacturing in particular during a pandemic that’s already pummeling economic activity.

After winning a ruling at the World Trade Organization, the U.S. last year hit $7.5 billion in European products with tariffs in a long-running dispute over Airbus SE subsides that harmed Chicago-based Boeing Co. Those duties are likely to continue until negotiators on both sides reach a settlement.

Meanwhile, the EU is waiting for a WTO judgment allowing for tariffs on U.S. products in a related case against Boeing. That decision is expected in September.

The EU has been pressing to end the American steel tariff as well as a separate 10% U.S. duty on European aluminum, both imposed under the Trump administration’s view that they’re necessary and allowed on national security grounds.

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