EU Weighs Temporary Tariff Freeze Before First Biden Call

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European Commission President Ursula von der Leyen is considering offering a six-month tariff suspension to U.S. President Joe Biden when they speak on the telephone, according to people with knowledge of her preparation.

The call is expected soon, according to the people, suggesting it could take place in the coming days. The commission’s chief spokesman, Eric Mamer, couldn’t confirm details on the timing when contacted via text message.

Von der Leyen’s trade advisers have recommended that she seek a freeze on levies related to aircraft and metal disputes that have hit $18 billion worth of European and American products, said the people, who asked not to be identified because the call will be private. This would allow the two sides time to negotiate a longer term agreement.

The conversation between the two, the first since Biden’s inauguration last month, will come at a pivotal moment in transatlantic relations. The EU is keen to put an end to the long-running spats -- the aircraft dispute has lasted 17 years -- while also resetting relations with the U.S., which hit a low point during Donald Trump’s term when he said the bloc was a “foe” of Washington.

“It’s very important that we put those bilateral trade irritants behind us and really concentrate on the broader international trade agenda,” EU Trade Commissioner Valdis Dombrovskis told an online event organized by the German Marshall Fund on Feb. 1.

EU Weighs Temporary Tariff Freeze Before First Biden Call

The World Trade Organization authorized the EU and U.S. to impose tariffs on $11.5 billion of each other’s exports over illegal aid provided to Airbus SE and Boeing Co. The levies hit aircraft parts as well as an array of unrelated sectors such as wine, spirits, olives, tractors and video games. Attempts to reach a settlement stalled last year after the U.S. boosted the punitive tariffs on Dec. 30.

“We think there can be a fresh start with the Biden administration and the EU,” Airbus Chief Executive Officer Guillaume Faury said in a Jan. 27 interview. “Both of them want to have a good start together.”

Motorcycles, Jeans

In 2018, Trump turned to a Cold War-era law to introduce a 25% duty on steel and a 10% levy on aluminum products on the basis of national security concerns. The EU disputed the legality of that measure and responded with retaliatory tariffs on about $3.4 billion of U.S. goods.

The EU targeted U.S. goods including Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey. If an agreement isn’t reached by June, the EU will be able to impose tariffs on an extra 3.6 billion euros ($4.3 billion) of American goods.

Any easing of the tariffs would build on other signs of agreements between the allies. Europeans are optimistic that a long-running dispute over how to tax global tech companies could be reached, and a deadlock over who would become the next head of the WTO appeared to be close to a resolution.

©2021 Bloomberg L.P.

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