Explanatory Memorandum to COM(2020)496 - Elimination of customs duties on certain products - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2020)496 - Elimination of customs duties on certain products. |
|---|---|
| source | COM(2020)496  |
| date | 08-09-2020 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
On 21 August 2020 Commissioner Hogan and US Trade Representative Lighthizer stated their intention to go ahead with a trade-facilitating package to eliminate or reduce customs duties for a small number of tariff lines covering EUR 168 million (approximatively USD 200 million) in EU and US exports. 1
The Commission sees this initiative as a first step to de-escalate bilateral trade tensions and to support the settlement of on-going disputes.
In substance, the Commission proposes to eliminate a number of customs tariffs on lobster, while the US will provide duty relief for a comparable economic value on products such as prepared meals, certain crystal glassware, surface preparations, propellant powders, cigarette lighters and lighter parts. The US requested the tariff reduction for lobster in light of its declining exports of the product to Europe and the world.
The tariff reductions should be implemented in a fully WTO consistent manner and respect the most-favoured nation (MFN) principle.
• Consistency with existing policy provisions in the policy area
The objective of this proposal is to create additional opportunities for EU and US operators, by eliminating or reducing tariffs. It should also improve trade relations with the United States, de-escalate trade tensions and support the settlement of on-going disputes with the US. It is fully consistent with the Treaty on European Union (TEU), which enshrines that the EU should encourage the integration of all countries into the world economy, including through the progressive abolition of restrictions on international trade. 2
• Consistency with other Union policies
The proposal is consistent with other Union policies.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
Articles 207 of the Treaty on the Functioning of the European (TFEU).
• Subsidiarity (for non-exclusive competence)
According to Article 5(3) of the TEU, the subsidiarity principle does not apply in areas of exclusive EU competence. The customs union and the common commercial policy is listed among the areas of exclusive competence of the Union in Article 3 of the TFEU. This policy includes the negotiation of trade agreements and the adoption of trade policy measures including tariff reductions pursuant to, inter alia, Article 207 TFEU.
• Proportionality
The Commission proposal is in line with the principle of proportionality, and necessary in light of our objective to de-escalate trade tensions with the US.
• Choice of the instrument
Regulation of the European Parliament and of the Council
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
Not applicable
• Stakeholder consultations
Not applicable
• Collection and use of expertise
Not applicable
• Impact assessment
Not applicable. For the EU, lobster is not a sensitive product as we are a net importer of the product. Last year the EU27 imported 42 million euro of lobster products from the US (15% of overall extra-EU imports) while the market is estimated to be some 290 million euro in size. EU producers are supplying less than 5% of our consumption. The elimination of import duties will support the food-processing industry and the hospitality sector. In return, the US has committed to ease market access for EU27 exports worth 143 million euro (USD 160 million) on average in the past three years (126 million euro in 2019), through a 50% reduction of duties
• Regulatory fitness and simplification
Not applicable
• Fundamental rights
The proposal is consistent with the EU Treaties and the Charter of Fundamental Rights of the European Union.
4. BUDGETARY IMPLICATIONS
The agreement on the liberalisation of industrial tariffs will have a limited negative impact on the budget of the EU in the form of foregone customs duties due to tariff liberalisation for the products covered by the tariff lines in annex to this Regulation, representing some 5.3 million euro in duties collected from the US (average 2017-19 period) 3 .