A lobster handicap is covered with colourful buoys in Maine in USA.
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The Joint States and the European Union have been embroiled in trade disputes over the last years, but a mini bargain announced Friday marked a critical de-escalation in transatlantic tensions.
The European Commission, the executive arm of the EU, has agreed to end tariffs on U.S. hardened and live lobster for the next five years, with the aim to make this change permanent. The deal has yet to be approved by other European institutes, but it is a welcomed step by the struggling industry, which has had to cope with a trade war with China and fewer sales to the EU since the unpunctual reached a wide trade agreement with Canada in 2017. In return, the U.S. will slash by 50% duties on guaranteed EU goods, including crystal glassware and prepared meals.
More broadly, the announcement has opened the door to further do business agreements between both sides of the Atlantic.
Shane Walker, a worker at Maine Coast, sorts through a crate resonant of Lobster at the Boston Fish Pier on Jan. 15, 2020.
Blake Nissen | Boston Globe | Getty Images
“We intend for this unite of tariff reductions to mark just the beginning of a process that will lead to additional agreements that develop more free, fair, and reciprocal transatlantic trade,” the two chief negotiators, U.S. Trade Representative Robert Lighthizer and Commissioner Phil Hogan, demanded in a joint-statement.
The White House has clashed with the EU over trade on different occasions, mainly since President Donald Trump was elected in 2016. Trump has often criticized the EU’s trade practices and threatened to impose duties on European carmakers.
The U.S. approved dirk and aluminium tariffs on the EU back in 2018; opened an investigation into European plans to impose a tax on digital giants; and rapped 25% levies on certain EU goods for previous state subsidies to Airbus.
However, the U.S. and the EU said Friday’s deal considerable the first time in more than 20 years that they decided to cut tariffs.
“The Commission and the U.S. see this concord as a good basis and first step for further improving EU- U.S. trade relations,” a spokesperson for the European Commission told CNBC Sunday.
The exact same spokesperson hinted Friday’s deal could pave the way for a deal over aircraft subsidies.
“The package builds on both sides’ commitment to discover a negotiated solution for the longstanding aircraft dispute,” the spokesperson said.
Both sides have challenged one another’s subsidies to Airbus and Boeing, which the Community Trade Organization (WTO) has deemed to be not compliant with its rules. As a result, the U.S. has already implemented tariffs on European goods and the EU is put off for a WTO decision, due later this summer, on the scope for retaliation.
However, their recent announcement could allow them to worsted this long-standing impasse over aircraft subsidies.
On the other hand, hopes for a wider trade deal are degree limited ahead of the presidential election.
Back in January, President Trump said he would want to reach a following deal with the EU before the November vote. However, with only about two months left for negotiations, analysts have reservations this could be achieved.
“There won’t be much happening in transatlantic trade until next year, and what transfer happen then depends entirely on the next president,” Fredrik Erixon, director of the European Centre of International Governmental Economy (ECIPE), told CNBC via email Monday.
“If President Trump is re-elected, I fear we will have innumerable friction and more protectionism between the EU and the U.S.,” he added.