USTR - United States and European Communities Reach Agreement on Enlargement Compensation Package
Office of the United States Trade Representative

 

United States and European Communities Reach Agreement on Enlargement Compensation Package
11/30/2005

WASHINGTON – U.S. Trade Representative Rob Portman announced today that the United States has reached a trade agreement with the European Union (EU) regarding the EU's May 2004 expansion. The agreement consists of a comprehensive package of EU trade concessions to compensate the United States for tariff increases that the EU implemented as a result of that expansion. It also reduces several EU tariffs and expands a number of EU tariff rate quotas and will enhance and strengthen market access opportunities for U.S exports to the EU market for a broad range of agriculture and several industrial goods. Negotiated under GATT rules, the agreement is subject to approval by the EU Member States and is expected to go into effect during 2006.

"I am pleased we have been able to negotiate a good compensation package that expands market opportunities for U.S. exporters," said Ambassador Portman. "The United States supports EU enlargement. There are, however, explicit rules in the GATT regarding how trading partners must be compensated when a customs union is formed. We have worked with U.S. industries affected by enlargement in order to uphold our rights."

The agreement was initialed in Brussels this morning and will be signed once the EU Member states approve the agreement. Ambassador Portman also thanked the U.S. Department of Agriculture and the U.S. Department of Commerce for their assistance in the negotiations.

Key elements of the deal include:

· The EU will permanently reduce tariffs on protein concentrates, fish (hake, Alaska Pollack, surimi), chemicals (polyvinyl butyral), aluminum tube, and molybdenuym wire.

· The EU will open country-specific tariff rate quotas for U.S. exports of boneless ham, poultry, and corn gluten meal.

· The EU will expand existing global tariff rate quotas for beef, poultry, pork, rice, barley, wheat, maize, sugar, fructose, preserved fruits, fruit juices, pasta, chocolate, food preparations, petfood, live bovine animals and sheep, and various cheeses and vegetables.

· As part of broader discussions on EU enlargement, the EU had agreed earlier to expand the maximum quantities allowed in licensing applications for imports into the EU of pork. This measure went into force in March 2005.


Background

On May 1, 2004, Estonia, Latvia, Lithuania, Poland, Slovakia, the Czech Republic, Slovenia, Hungary, Cyprus and Malta acceded to the European Union. The 10 new members were required to change their tariff schedules to conform to the EU’s common external tariff schedule, resulting in increased tariffs on certain imported products. Under General Agreement on Tariffs and Trade 1994 (GATT 1994) Articles XXIV: 6 and XXVIII, the United States is entitled to compensation from the EU to offset some of these changes. The expansion of EU quotas to account for the addition of 10 new countries and more than 75 million new EU consumers was another key element of the negotiations.

If the U.S. and the EU had not been able to reach this agreement, the U.S. had the right to raise tariffs on an offsetting amount of imports of products of which the EU is the dominant supplier.

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