Tuesday, 8 October 2019

Questions (166)

Michael McGrath


166. Deputy Michael McGrath asked the Minister for Business, Enterprise and Innovation the goods exported to the United States of America that will be subject to higher tariffs in October 2019 and in the near future; the scale of the increase; the quantity and value of exports to the United States in 2018 and to date in 2019; the potential impact on the economy here; and if she will make a statement on the matter. [41102/19]

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Written answers (Question to Business)

On 6 October 2004 the United States requested consultations, in line with WTO procedures, with the governments of Germany, France, the United Kingdom, and Spain, and with the European Commission concerning measures affecting trade in large civil aircraft. The US concern was that Airbus were receiving unfair subsidies from these Member States regarding the production of its civilian aircraft and that these subsidies were damaging to a direct competitor, US aircraft manufacturing firm Boeing.

In parallel, on 27 June 2005, the EU made its own request to the WTO for consultations citing Boeing’s receipt of unfair subsidies from both federal and state level authorities in the US.

On 15 May 2018 the WTO Appellate Body found in favour of the US/Boeing - that Airbus were receiving unfair subsidies from EU Member States. Subsequently, a WTO arbitrator evaluated the claim and reported on the 2 October 2019 that the value of countermeasures that the US can impose commensurate with the adverse effects caused by EU subsidies is $7.496 billion. In the parallel Boeing case, the WTO arbitrator’s report is due for finalisation and publication in 6-9 months’ time – Q2 2020.

On the same day as the WTO Arbitrators' Findings were released, the Office of the United States Trade Representative (USTR) published its final list of products that will be targeted with new tariffs. The list has 15 sub-sections with Ireland, along with other EU Member States, included in 9 of these sub-sections. The new tariffs can be introduced once the US obtains "authorisation" from the WTO Dispute Settlement Body (DBS) at the next scheduled DSB meeting and my Department understand that a special sitting of the DSB has been arranged for 14 October 2019 to fulfil this procedural requirement.

In relation to impacts, latest CSO data shows that Ireland recorded goods exports to the US of approximately €39.27 billion in 2018. The US is Ireland’s largest goods export market, accounting for 28% of total goods exports in 2018. For the period January to June 2019, Ireland’s total goods trade with the US was recorded as in the region of €22.2 billion. This was an increase of 14% of the same period in 2018.

For those products effected by the USTR list, Ireland exported approximately €362m worth of goods to the US in 2018, with the principal exports being:

- liqueurs and cordials valued at €168.5m,

- butter valued at €156.8m and

- cheddar cheese valued at €37.3m.

Exports of these products will attract an additional 25% tariff on entry into the US.

My Department continues to engage with industry to fully understand the potential impacts these measures will have. We are also fully engaged with colleagues in the Department of Agriculture, Food and the Marine and our Enterprise Agencies in relation to the implications for Irish business.

As International Trade Policy is a competence of the EU Commission under the EU Treaties, the EU Commission takes the lead on this issue taking into account the views of individual Member States and the collective good of the Union. Therefore, Ireland continues to be engaged with the Commission, both at a Ministerial and Official level on these issues. Indeed, as recently as Tuesday last (1st October), I attended an EU Council of Trade Ministers’ meeting in Brussels where, among other items, we discussed our concerns on these Aircraft cases and I articulated Ireland’s particular concerns. I also held a bilateral meeting with Trade Commissioner-elect Phil Hogan while in Brussels at which we discussed the WTO Airbus and Boeing cases and the potential impact the imposition of tariffs on Ireland would have.

The European Commission confirmed for Member States that is has consistently communicated to the US that the EU is ready to work with them to agree on a fair and balanced solution for our respective aircraft industries. As recently as this July, the EU shared concrete proposals with the US for a new regime on aircraft subsidies, and a way forward on existing compliance obligations on both sides, to avoid a round of tit-for-tar tariffs as the EU will have a similar option against the US in some 6/9 months when an Arbitrator determines the quantum of damage to EU industry US subsidies to Boeing has caused. So far, regretfully, the US has not engaged. Nonetheless, Ireland’s preference, as I and my Government colleagues as well as my officials have articulated, along with the EU, is for a negotiated settlement to be reached on these issues.

Government has also highlighted our concerns in bilateral engagements with US interlocuters in Dublin and Washington, intensively over recent months. The issue of the tariffs was also raised during the US Presidential and Vice-Presidential visits this year. I and my officials, as well as colleagues in the Department of Foreign Affairs & Trade and Agriculture, Food & the Marine, continue in contact with our US counterparts in Dublin and Washington on these issues.

Our position remains that the mutual imposition of sanctions will only inflict damage on businesses and citizens on both sides of the Atlantic and harm global trade and the broader aviation industry at a sensitive time. Ireland does not want to see this escalation at this time.