Documents considered by the Committee on 27 March 2019 Contents

5EU retaliatory duties on imports from the US (Byrd amendment WTO dispute)

Committee’s assessment

Politically important

Committee’s decision

Cleared from scrutiny; further information requested; drawn to the attention of the International Trade Committee

Document details

(a) Commission Delegated Regulation (EU) …/... of 27.2.2019 amending Regulation (EU) 2018/196 on additional customs duties on imports of certain products originating in the United States of America; (b) Commission Report on the exercise of the power to adopt delegated acts conferred on the Commission pursuant to Regulation (EU) 2018/196 of the European Parliament and the Council of 7 February 2018 on additional customs duties on imports of certain products originating in the US.

Legal base

(a) Article 3(3) of Regulation (EU) 2018/196; QMV (to raise an objection)

(b) Article 4(2) of Regulation (EU) 2018/196

Department

International Trade

Document Numbers

(a) (40431), 6951/19 + ADD 1; (b) (40430), 7189/19 + ADD1, COM(19) 118

Summary and Committee’s conclusions

5.1Since 2005, the EU has applied retaliatory measures against the US in the context of the EU’s (and others’) World Trade Organisation (WTO) dispute on the US Continued Dumping and Subsidy Offset Act of 2000 (CDSOA) (also known as the Byrd Amendment).

5.2The amount of EU retaliation must be adjusted each year that the US continues to remain in non-compliance with the WTO ruling because the amount the US distributes to its companies is different each year. The adjustments are made by either changing the list of goods or by changing the amount of extra duty on the designated goods imported from the US.

5.3The draft Commission Delegated Regulation relates to the 2019 adjustment of retaliatory measures (to be applied from 1 May). It proposes decreasing duties on US imports of sweetcorn, spectacle frames and mountings, crane lorries and women’s denim trousers from 0.3% to 0.001%.

5.4The Commission Report summarises the exercise of the Commission’s power to adopt such delegated regulations since 2014.

5.5In his Explanatory Memorandum of 14 March 2019, the Minister of State for Trade Policy (George Hollingbery MP) fully supports the Commission’s proposed Delegated Regulation for 2019 on the basis that “it simply makes a necessary technical adjustment to amend the level of retaliation as authorised by the WTO”. He implicitly supports the Commission Report.

5.6On the Brexit implications of the draft Delegated Regulation, the Minister states that:

5.7The Minister further states that the UK “will of course need to take matters such as this into account in developing the country’s trading relationship with the US going forward”.

5.8We thank the Minister for setting out the Brexit implications of the periodic review and adjustment of these WTO-permitted retaliatory duties against the US, as requested. We note that the Government does not intend to apply these countermeasures from the end of any negotiated Brexit transition period, or immediately following a ‘no deal’ EU exit, on the basis of “their very low value, and that the US is in any case phasing out the measures under dispute”.

5.9We clear both documents from scrutiny, but ask the Minister to provide a summary table:

5.10Furthermore, we highlight the Minister’s statement that “[t]he UK will of course need to take matters such as this [retaliatory duties] into account in developing the country’s trading relationship with the US going forward”.

5.11In the context of escalating trade tensions between the EU and US and the desire of the UK government to conclude an ambitious future economic partnership with the EU and free trade agreement with the US post-exit, we ask the Minister to share the Government’s analysis on how the continued application, or not, of existing EU countermeasures against the US post-exit is expected to:

5.12We draw the Minister’s Explanatory Memorandum and our conclusions to the attention of the International Trade Committee.

Full details of the documents

(a) Commission Delegated Regulation (EU) …/... of 27.2.2019 amending Regulation (EU) 2018/196 on additional customs duties on imports of certain products originating in the United States of America: (40431), 6951/19 + ADD 1; (b) Commission Report on the exercise of the power to adopt delegated acts conferred on the Commission pursuant to Regulation (EU) 2018/196 of the European Parliament and the Council of 7 February 2018 on additional customs duties on imports of certain products originating in the US : (40430), 7189/19 + ADD1, COM(19) 118.

Background

The EU-US dispute

5.13In 2000, the US passed the CDSOA (also known as the Byrd Amendment). It provides that anti-dumping and countervailing duties collected by US authorities during the previous fiscal year should be distributed directly to the affected domestic companies (rather than to the Treasury).

5.14The EU, along with eight other WTO members, challenged the legislation in the WTO. In January 2003, the WTO found that the CDSOA did not comply with WTO rules and should be repealed. The US was given till the end of 2003 to comply with the ruling.

5.15The US failed to bring itself into compliance with its WTO obligations and the EU was authorised by the WTO to impose an additional customs duty above its bound customs duties (i.e. the permitted maximum tariff rates generally allowed to be imposed by one WTO Member on imports from another Member) on a list of US products covering, on a yearly basis, a total value of trade not exceeding 72 per cent of the CDSOA duties collected on imports from the EU for the most recent year for which data are available. The other complainants were also granted authority to impose identical retaliatory measures.

5.16Since 1 May 2005, the EU has applied additional customs duties on imports of certain products originating in the US on a yearly basis, adjusting the level of retaliation proportionately (by adjusting the rate of additional import duty and/or adding or deleting products covered by the list) to the amount disbursed from duties collected on EU products in the most recent distribution.

5.17In his Explanatory Memorandum, the Minister states that whilst the CDSOA has been repealed, it continues to have transitional effects such that the EU remains authorised to imposed retaliatory measures.

The proposed Commission Delegated Regulation

5.18The draft Commission Delegated Regulation amends Regulation (EU) 2018/196 establishing additional customs duties on imports of certain products originating in the US. It proposes decreasing, with effect from 1 May 2019, the amount of additional duty applied by the EU on imports from the US of sweet corn, frames and mountings for spectacles, crane lorries and women’s denim trousers and breeches from 0.3 per cent to 0.001%.

5.19The Minister’s Explanatory Memorandum notes that “[t]his year’s proposed retaliation of USD 3,355.82 (£2,540.36) represents a negligible sum compared to the 2018 level of retaliation, which amounted to USD 682,823 (£516,897) and that has been applied since 1 May 2018”.

The Commission Report

5.20The Commission report summarises the Commission’s exercise of powers to adopt delegated acts conferred on the Commission pursuant to Regulation (EU) 2018/196. However, as the EU Regulation entered into force on 8 March 2018, no delegated acts have been adopted since then because the 2019 delegated regulation is yet to be adopted. This report therefore provides a summary of four delegated acts adopted by the Commission from 2015 to 2018 regarding these additional duties.

5.21The delegation of power is automatically extended for a further five-year period unless the European Parliament or the Council opposes such extension not later than three months before the end of each period.

Previous Committee Reports

None.





Published: 2 April