Increase in Excise Duties on Tobacco Products

The EU Council of Ministers has adopted a directive that amends existing EU excise duty legislation on tobacco products and narrows the differences between Member States’ tobacco taxation levels. In short, the directive calls for an increase in EU minimum taxation levels on cigarettes and fine cut tobacco products by 2014. For cigarettes, the directive allows a transitional period, until 2018, for countries that have not yet achieved (or have only recently achieved) the existing minimum rates. It also permits countries that do not benefit from the transition to impose a quantitative limit of 300 cigarettes on Member States that apply the transitional arrangements. The directive seeks to promote public health by gradually reducing tobacco consumption and to create a more level playing field for manufacturers by making taxation rules more transparent.

EU Commission Report Criticizes U.S. 100 Percent Scanning Requirement as Too Costly

A European Commission (EC) report has criticized the U.S. 100 percent scanning requirements for U.S. bound sea containers by July 1, 2012, as too costly. EC Commissioner Algridas Semata said that the U.S. legislation would “require sizeable investments, increased transport costs and entail massive welfare losses for no proven security benefit.” In the report, the EU Commission expressed reservations over whether 100% scanning would in fact improve security. It noted that the 100 percent scanning requirement could create a false sense of security and divert scarce resources from other essential requirements. In addition, the EU cautioned that the U.S. legislation could disrupt global trade and transport, and at a considerable cost. Instead of the 100 percent scanning requirement, the EU has been advocating a more “multi-layered, risk-based approach.”

U.S. Publishes Trade Agenda for 2010

On March 1, 2010, U.S. President Barack Obama’s administration sent Congress the White House’s 2010 trade policy agenda. The report underscores the importance of the role of trade in supporting U.S. exports, creating jobs and economic growth and helping facilitate global economic recovery. In addition, it outlines the U.S. key trade policy goals, which include, amongst others, promoting U.S. exports; strengthening enforcement of U.S. trade rights; supporting a Doha trade agreement that liberalizes market access in the areas of agriculture, goods and services; encouraging advanced developing countries to “accept responsibility commensurate with their growing influence”; building on existing trade agreements; continuing efforts to resolve issues that have slowed progress in pending FTAs; and fostering additional partnerships with developing and poor nations.

Ecofin Agrees on Tax Recovery Measures

As part of the EU’s widespread efforts to combat fraud, EU finance ministers have agreed on a draft package of measures that seeks to better facilitate the recovery of taxes in fraud cases, to improve tax governance, and to combat tax evasion. Key to this package of measures is a draft directive on strengthening mutual assistance between Member States. The directive aims to assist Member States in their recovery of taxes by providing them with rules that are easier to apply and by creating more flexible conditions for requesting information held by banks and other financial institutions. Currently, Member States’ provisions on tax recovery are national in scope, making it difficult for states to reach across jurisdictional boundaries to seek assistance from other Member States.

EU and Vietnam to Launch Bilateral Free Trade Negotiations

The EU and Vietnam have announced the start of bilateral free trade negotiations. Amidst the failed Doha Round of global trade talks, the EU-Vietnam trade talks represent the latest in an ever-increasing trend towards bilateral trade accords. Vietnam is the EU’s fifth largest trading partner within ASEAN. Bilateral trade between the EU and Vietnam amounted to almost 12 billion euro in 2008. The Commission will now discuss with the Council and Parliament how to proceed. Under the (recently ratified) Lisbon Treaty, the European Parliament has expanded powers, including the right to block trade deals.

EU Temporarily Suspends Sri Lanka’s GSP+ Benefits

After an “exhaustive” investigation by the EU Commission, which identified significant shortcomings in Sri Lanka’s implementation of several UN human rights conventions, the EU will temporarily suspend Sri Lanka’s GSP+ benefits in six months. Under the GSP+ arrangement, certain developing countries are eligible for additional trade preferences, beyond standard GSP treatment, provided that they ratify and implement 27 international conventions concerning human and labor rights, sustainable development and good governance. In light of the Commission’s findings, once the temporary withdrawal takes effect, EU imports from Sri Lanka will only be subject to standard GSP treatment. Once Sri Lanka takes the necessary steps towards effective implementation of the GSP+ relevant human rights conventions, the EU Commission will propose to EU member states that Sri Lanka’s GSP+ treatment be reinstated.

U.S. Imposes Duties on Chinese Steel Pipes

Against the backdrop of an increasingly strained trade relationship between the U.S. and China, the U.S. has imposed countervailing duties of between 11 and 13 percent on $382 million worth of Chinese steel pipe imports. The duties come in response to a petition filed by several companies, including U.S. Steel Corp., which complained of unfair Chinese government subsidies. U.S. Steel Corp. has been seeking countervailing duties of between 15 and 30 percent, as well as anti-dumping duties of 60 percent. China is widely expected to launch a WTO dispute over the latest countervailing duty decision. A decision by the U.S. on the anti-dumping duties is expected later this year.

Israeli Products Originating in West Bank Subject to EU Import Duties

A recent ECJ ruling has held that products made by Israeli companies in the West Bank are subject to EU import duties because they exceed the territorial scope of existing EU trade agreements with Israel and the Palestinian Authority. The EU provides duty-free access both to Israeli products made in Israel and also to Palestinian goods made in the West Bank. In the instant case, a German company imported drink-makers from an Israeli company located in the West Bank. The German company told German customs authorities that its imports came from Israel. Suspecting that the goods came from the West Bank, the German customs authorities contacted Israeli customs authorities, which reported only that the goods came from an area under Israeli responsibility, not whether they had come from the occupied territories. Consequently, Germany imposed customs duties. The ruling, in effect, opens the door to EU import duties on Israeli goods originating in the West Bank.

ASEM Joint Customs Operation Results in Seizure of Counterfeit Goods

A joint customs operation, called Diablo II, formulated within the framework of the Asia-Europe Meeting (ASEM), has successfully resulted in the seizure of more than 65 million counterfeit cigarettes and 369,000 other counterfeit items, including shoes, toys, cameras, headphones, hats, caps, gloves, handbags and other items. The seizure of the counterfeit cigarettes alone will save approximately 10 million euro in potential losses to the EU and its Member States. The operation’s success was due to the close cooperation and exchange of information between the 13 Asian countries and 27 EU Member States that comprise ASEM. The operation also marked the first time that the European Anti-Fraud Office (OLAF) opened its secure online-based communication tool (the Anti-Fraud Information System) to the 13 Asian ASEM members. nguage=en

EU and Singapore to Begin Free Trade Talks

As part of its effort to deepen its engagement with the ASEAN region, the EU has announced that it will launch negotiations for a bilateral free trade agreement with Singapore. The EU is Singapore’s largest trading partner. Bilateral trade in goods and services exceeded 55 billion euro in 2008. Trade talks have taken place from 8 – 12 March in Singapore. anguage=en