• Thu
  • Aug 21, 2014
  • Updated: 1:34am
BusinessEconomy
TRADE

EU set to offer to remove tariffs on nearly all imports from US

Proposal covers 96pc of existing duties in the first step towards the world's largest free-trade deal, with Washington expected to do the same

PUBLISHED : Friday, 07 February, 2014, 3:49pm
UPDATED : Saturday, 08 February, 2014, 3:32am

The European Union will offer to lift tariffs on nearly all goods imported from the United States as part of negotiations towards the world's largest free-trade deal, sources said.

The offer would be made on Monday, a week before face-to-face talks between EU trade chief Karel De Gucht and his US counterpart Michael Froman in Washington, they said.

The European Commission, which handles trade issues for the EU's 28 member states, will tell the US how far it is willing to open its markets, while US officials are expected to do the same.

Officials familiar with the EU's proposal have said the EU will offer to lift 96 per cent of existing import tariffs, retaining protection for just a few sensitive products such as beef, poultry and pork.

"This is just the first step, but it sends a message that no sector will be completely shielded from liberalisation," said one person involved in preparing the EU offer. Two other European officials confirmed the offer.

Tariffs between the US and the EU are already low, and both sides see greater economic benefits of a transatlantic accord coming from dropping barriers to business.

However, professor Dan Hamilton, executive director of the Centre for Transatlantic Relations at John Hopkins University in Baltimore, said tariff reductions would make a difference, given the size of the EU and US markets - 815 million people.

"Just reducing tariffs would be worth five times the US-South Korea trade deal, and that was a big deal in the US," he said during a recent visit to Brussels, referring to a deal that went into force in March 2012.

The US and the EU are seeking to seal a trade deal encompassing half the world's economic output, hoping it can bring economic gains of about US$100 billion a year for both sides.

Monday's exchange of market access offers will happen simultaneously so that neither side has an advantage over the other. The swap marks the first concrete step since negotiations were launched in July, although offers can change during trade talks.

Officials close to the offer exchange said the EU's proposal was split into four categories.

First, Brussels would offer to drop 96 per cent of tariffs on the understanding that Washington would reciprocate.

Two transition categories would be proposed for a further 3 per cent of goods, with periods of three and seven years until tariffs are dropped to allow EU industry to adapt. Those categories could include commercial vehicles and some agricultural products.

In the final category, sensitive products would remain protected but the US would be granted enlarged quotas.

Last year, the EU agreed to allow in an extra 45,000 tonnes of beef from Canada and a US allowance is expected to be at least double that.

The EC declined to comment. One EU official said the commission was preparing the exchange of offers for next week.

All moves to lower the cost of trade are seen as beneficial for companies, particularly carmakers with US and European plants such as Ford Motor, General Motors and Volkswagen.

EU cars imported into the US are charged a 2 per cent duty, while the EU sets a 10 per cent duty on US cars. Including even higher duties for trucks and commercial vans, the burden for carmakers amounts to about US$1 billion every year.

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