Biden Administration Commits to Resolving EU Retaliatory Tariffs, Including for Rice

BRUSSELS, BELGIUM – Yesterday, President Biden’s U.S. Trade Representative (USTR) Katherine Tai and Secretary of Commerce Gina Raimondo announced with their European counterpart, European Commission Executive Vice President Valdis Dombrovskis, that they are officially working towards an agreement to repeal the Section 232 tariffs on U.S. and European products.  The announcement comes just weeks before the three-year anniversary of the tariffs being imposed.

In June 2018, the U.S. used Section 232 of the Trade Expansion Act of 1962 to justify imposing 25 percent tariffs on imported steel and aluminum from a number of origins, including the European Union (EU) and the United Kingdom (UK).  As a result, the EU (and now the UK as an extension) imposed retaliatory duties on a similar coverage of U.S. imports, including a 25 percent tariff on milled rice.  American exports have collective duty-free access for 38,721 MT of milled rice under an existing tariff rate quota with the EU and the UK, however, the 25 percent retaliatory tariff is now applied to those tons as well.

The statement released by the office of the U.S. Trade Representative said the leaders, “[a]greed to chart a path that ends the WTO disputes following the U.S. application of tariffs on imports from the EU under section 232.”  In addition to the statement, the EU agreed not to increase duties on certain U.S. products on June 1, as originally scheduled, ahead of President Biden’s planned European trip next month.

“We are really relieved to hear that the Administration, including both Ambassador Tai and Secretary Raimondo, are committed to resolving this tariff conflict,” said Mark Holt, Arkansas rice miller and chair of the USA Rice Subcommittees that oversee Europe, Africa, and Middle East trade policy and promotions.  “Between the uncertainty around Brexit the last couple of years and the impact of COVID-19 on exports, these 232 tariffs added another layer of difficulty for our industry to maintain open trade with our longtime customers in Europe.”

The USTR announcement was mum on any plans to address removing the 25 percent retaliation on U.S. products shipped to the UK, which has left the EU Customs Union following Brexit, since the original imposition of the tariffs.  Tai only publicly committed to working with the EU to remove the EU tariffs as the UK tariffs must be negotiated separately.

“This dispute was never really about agriculture,” said Holt.  “We’ve just been caught in the steel and aluminum crossfire so we’d love to see swift removal of both these EU duties and those imposed by the UK, another very important market for U.S. rice.”