On The Hill

U.S. Increases Tariffs on EU Aeros, Aero parts

 The Trump administration announced late last Friday (Feb. 14) it would increase tariffs on European aircraft from 10 percent to 15 percent but would not raise tariffs on consumer goods.

The tariffs, stemming from the Large Civil Aircraft case involving Boeing and Airbus, are the administration’s latest attempt to correct the EU’s behavior regarding subsidies to Airbus. U.S. importers of consumer goods like cheese, wine, whiskey, olives, and others breathed a momentary sigh of relief, as tariffs on those goods remain at 25 percent. The U.S. Trade Representative’s (USTR) office had weighed the option of increasing those tariffs up to 100 percent.

U.S. law requires USTR to review and possibly revise the list of tariffed goods 120 days after implementation and every 180 days thereafter in what is known as the “carousel retaliation.” That prompted a new round of lobbying over the duties, with wine importers and other sectors hit hard by the initial action urging USTR to remove them from the list, or at least not hit them with additional tariffs.^[1] Boeing also urged the administration to specifically target just aeros and aero parts in the latest round of tariffs.

 

U.S. – EU Mini Deal?

The refusal to increase tariffs on consumer goods could be used as a pathway for the two bodies to seek a mini trade deal. USTR Robert Lighthizer and EU Trade Commissioner Phil Hogan have a self-imposed deadline of March 18 to reach some sort of agreement on transatlantic relations, which could pave the way for such a deal.

Hogan told reporters this week that a mini deal could encapsulate several outstanding issues, including trade and energy imports.

EU officials are reportedly ready to offer a package of concessions including farm goods, such as peanuts and genetically modified plants, in addition to a deal on conformity and industrial standards. There would also be scope to negotiate over industrial goods in the trade-offs, including a potential cut to the EU’s 10 percent tariff on cars, they said.^[2] 

Hogan also acknowledged the good faith gesture from Lighthizer to not raise the aforementioned tariffs on consumer goods. 

 

Senators Urge Administration to Negotiate UK Trade Deal ASAP

A group of 19 bipartisan senators are urging the Trump administration to prioritize trade talks with the United Kingdom (UK) that would focus on lowering tariffs, greater access for U.S. agricultural markets, and digital services taxes (DST).

Senators Rob Portman (R-OH) and Chris Coons (D-DE) led the letter, which can be read here.

Both Prime Minister Boris Johnson and President Trump have expressed interest in negotiating a deal, as the UK begins its Brexit phase out from the EU by year’s end.

 

Puerto Rico Air Cargo, Passengers Restrictions Eased by DOT Notice

The Department of Transportation (DOT) issued its first notice on Wednesday (Feb. 19) in favor of granting Puerto Rico a waiver to allow foreign airlines to perform certain cargo and passenger transfer services at international airports.

A public comment period will open to then issue a final determination. Comments may be submitted from Mar. 4-11 at www.regulations.gov in Docket DOT-OST-2019-0085. If approved, the waiver allowing foreign air carriers authorized to serve the U.S. to enable expanded cargo and passenger transfer activities, would be in effect for two years.

Once the final determination is received, the island will become the U.S. mainland’s first air hub in the Caribbean. With the two-year authorization, which is the same the term imposed on jurisdictions such as Alaska, Guam and Northern Mariana Islands, Puerto Rico will have the ability to generate more traffic and air cargo, which puts the island in the international spotlight, Laboy said. Among other things, the local government said the waiver would “support a shift in the growth in passenger and cargo traffic seen now at foreign airports in the region to include the Dominican Republic, Colombia, and Panama to U.S. airports in Puerto Rico.”^[3] 

The analysis firm Estudios Técnicos issued a study that said the authorization would spur at least 10 new flights per day, create more than 900 new jobs, and provide an increase in the industry’s payroll of about $30 million.

“This first notification of this important waiver for the transfer of international air cargo and passengers will allow us to continue strengthening the facilities of our three international airports, which will represent greater economic activity and job creation in each one,” Ports Authority Interim Executive Director Joel A. Pizá-Batiz said.

“This is a historic event that will foster economic development for our island,” Pizá-Batiz added.

Economic Development and Commerce Secretary Manuel Laboy said his department will develop a marketing plan to publicize advantages that Puerto Rico offers the aviation industry.

 

References

^[1] Palmer, Doug. “U.S. bumps up aircraft tariffs on EU in Airbus dispute.” Politico Pro. 14 Feb. 2020. https://subscriber.politicopro.com/article/2020/02/us-bumps-up-aircraft-tariffs-on-eu-in-airbus-dispute-1880195

^[2] Hanke, Jakob. Palmer, Doug. “More than peanuts: EU woos Trump with farming and industrial concessions.” Politico Pro. 21 Feb. 2020. https://subscriber.politicopro.com/article/2020/02/more-than-peanuts-eu-woos-trump-with-farming-and-industrial-concessions-1882776

^[3] Kantrow-Vázquez, Michelle. “U.S. Dept. of Transportation paves way to ease P.R.’s air cargo, passenger restrictions.” News is My Business. 20 Feb. 2020. https://newsismybusiness.com/u-s-dept-of-transportation-paves-way-to-ease-p-r-s-air-cargo-passenger-restrictions/