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"Seizing the Summit Momentum and Advancing the Trade Agenda"

Date

14 Jun 2021

Sections

Trade & Society
EU-US relations

Brussels/Frankfurt, 14 June 2021 – The upcoming EU-US Summit in Brussels must be used to advance the transatlantic trade agenda. In recent weeks, both sides have already taken important steps to reduce the issues at stake in bilateral trade. However, both the Airbus-Boeing tariffs and the US tariffs on steel and aluminium continue to burden the mechanical and plant engineering sector. Solutions must be found here in the coming months.

However, the EU and the USA should not be content with settling conflicts that have been simmering for some time. Rather, the VDMA is calling on the European Commission to use the current momentum to advance a positive transatlantic trade agenda. In a letter from VDMA President Karl Haeusgen to EU Trade Commissioner Valdis Dombrovskis, he calls on the EU to conclude agreements with the US on the elimination of tariffs on industrial goods and on conformity assessment. "This would give an important boost to industry on both sides of the Atlantic and help accelerate the recovery of the machinery sector after the crisis," Haeusgen stresses.

For decades, the USA has been the most important export market and foreign investment location for German mechanical and plant engineering. The export volume was more than 18 billion euros in 2020 and the industry offers around 115,000 highly qualified and well-paid jobs on the American labour market - significantly more jobs than in the US steel industry.

Significant cost savings through tariff reduction

US tariffs on machinery and equipment from the EU have a wide range: they range from "duty free" for products such as construction and packaging machinery to a peak of 9 per cent for certain ball bearings. VDMA President Haeusgen explains: "Although these tariffs are actually relatively low, their complete abolition would lead to cost savings of 850 million euros per year in the transatlantic mechanical engineering sector."

In addition, a product exported to the US often has to undergo local certification. "These conformity assessments lead to additional costs for exporters, which is particularly burdensome for small and medium-sized enterprises," explains Haeusgen. This is also one of the main reasons why a machine produced for the US market can still cost between about 5 to 18 per cent more than a comparable machine for the European market. Mutual recognition of certifications would be the solution, and the EU Commission has already had the mandate for corresponding negotiations since 2019.

Advance an ambitious positive transatlantic trade agenda

The VDMA basically appeals to the Europeans and Americans to work for a better trade relationship.  "That is why we also welcome the announcement of a new Trade and Technology Council - a promising idea that can provide the much-needed platform for further economic transatlantic integration," Haeusgen explains. The Trade and Technology Council can ensure that the EU and the US work together to develop the leading industry standards of tomorrow, for example in digital technology, electromobility and Artificial Intelligence. Work could also be done on a joint approach to a carbon border tax.  

"I understand that the transatlantic economic partnership has been significantly challenged over the last four years. The upcoming EU-US Summit is a good opportunity to get the negotiations back on track," Haeusgen writes in the letter to Dombrovskis.

 

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