There has been a long running dispute between the EU and the US regarding the use of export subsidies by the US, which the EU considers illegal. In a final attempt to gain compensation, the EU has proposed imposing tariffs on certain products that originate in or were made in the US. In many cases, these tariffs will be up to 100 percent of the value of the products. The European Commission issued a list of these potential products on the 13th September 2002. Businesses that will be adversely affected by the sanctions have 60 days (until the 12th November 2002) in which to request an exemption and have their products removed - if the Commission thinks that it is justified. After the expiry of this 60 day period, the Commission will draw up a definitive list, after which no changes will be possible.
Who will be affected?
There are three main groups who will be affected by the sanctions:
- US Manufacturers: Manufacturers who import a large amount of products into the EU will suffer, as European customers will undoubtedly cancel orders.
- US Sales and Distribution Networks inside the EU: US subsidiaries/distributors based in the EU will encounter increased costs as a result of the sanctions.
- European Users of US Products: Companies will find it increasingly expensive to import US products as a result of the increased costs. Who pays the tariff will depend upon the contract between the buyer and the seller, but, directly or indirectly, the seller is likely to try and pass these on. Lawyers should check the contracts.
If the sanctions go ahead (which looks likely), the additional costs to the Oil & Gas industry will be substantial as the list covers a number of products frequently used by the industry. The following is a list of some of the products relevant to the industry that are included in the proposed list:
- Certain ceramic insulation, construction and building materials
- Glass products including safety glass
- Semi-finished iron and steel products (this includes flat-products, coils, bars & rods, wire, angles shapes)
- Finished steel, iron and alloyed metals (including line pipe used for oil & gas pipelines, submerged arc welded oil & gas pipelines, welded casing pipes, threaded gas pipe tubes, steel flanges, scaffolding materials, stranded wires and ropes, steel grill, anchors, grapnels and like products, nails and screws
- Copper and aluminium products
- Various industrial tools
- Mechanical appliances (incorporates a vast number of products including engines, turbines & pumps)
- Electrical machinery (including electric motors, certain electric generating equipment, electric transformers; electro-magnets, electric accumulators, storage water heaters, telephones, transmission and receiving apparatus for radio-telephony, video monitors, electrical capacitors and resistors, switches and electricity insulators).
This is not a comprehensive list of all the products relevant to the industry, but is indicative of the areas covered.
What action can you take?
Businesses across Europe and in the US are encouraged to take action in order to minimise the potential costs that will be incurred as a result of these sanctions. Objections can only be made on forms which can be found and submitted via the European Commission website at www.europa.eu.int/comm/trade/index_en.htm (follow the links for the FSC dispute), along with a comprehensive list of the products affected.
For further information please contact Penelope Warne at [email protected] or on +44 (0)1224 622002.
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