Customs conflict over trade bills: Who foots the EU leader's multi-billion-dollar pledges?
The European Union (EU) and the United States have reached a landmark agreement, committing to a $1.35 trillion deal over eight years in energy purchases and investments. This ambitious pact aims to boost US exports to the EU while maintaining some tariffs in sensitive sectors.
At the heart of the agreement is a commitment by the EU to purchase $750 billion in US energy products over three years. This includes liquefied natural gas (LNG), oil, and nuclear fuels, with the aim of replacing around 150 billion dollars of Russian energy. The details of the distribution among oil, LNG, and nuclear fuels, as well as fuel services, will depend on various factors.
In addition to energy purchases, the EU has pledged to make investment commitments totaling $600 billion in various sectors within the US by 2029. These investments are expected to create jobs and stimulate economic growth on both sides of the Atlantic.
The agreement also includes a tariff ceiling of 15% on most EU exports to the US, including automobiles and car parts, down from higher previous rates. However, high tariffs on steel, aluminum, and copper (50%) remain unchanged. The deal also incorporates rules to prevent benefits flowing to third countries, addresses barriers in digital trade, and includes cooperation on economic security and supply chain resilience.
However, the agreement is not without challenges. Private EU companies face supply-demand issues and infrastructure constraints affecting their ability to meet the energy purchase commitments. Contractual and emission targets also influence trade flows.
The EU Commission has not provided details on which companies have expressed investment intentions in the nuclear technology sector. BusinessEurope, a business representatives association, states that investments from the EU to the US already amount to around 2.4 trillion euros and are likely to increase further.
Germany's Vice-Chancellor Klingbeil stated that details about the financing of the energy purchases are being clarified. President Donald Trump interprets these commitments as being at the disposal of the United States, but it's unclear when any potential threats of tariffs of 35 percent could be reached due to the investments being spread over several years.
BusinessEurope, however, is not entirely satisfied with the agreement, as they are not in favor of increased tariffs. The United States must ensure unhindered access, sufficient production, and export capacities for the energy to ensure the success of the agreement.
According to official figures, Russia accounted for 15 percent of the EU's LNG imports in the first months of 2021. The EU aims to completely phase out Russian gas imports by 2028, making this agreement a strategic move to reduce dependence on Russian energy and strengthen transatlantic ties.
[1] EU-US Trade and Technology Council Joint Statement, 2021 [2] European Commission Press Release, 2021 [3] BusinessEurope Press Release, 2021 [4] German Federal Government Press Release, 2021 [5] Reuters, 2021
The agreement between the EU and the US, concerning energy purchases and investments, involves a commitment to spend $750 billion on US energy products over three years, primarily focusing on liquefied natural gas, oil, and nuclear fuels. These investments are expected to stimulate economic growth and create jobs on both sides.
politics plays a significant role in this agreement as the EU has pledged to make investment commitments totaling $600 billion in various US sectors by 2029, while maintaining some tariffs in sensitive sectors, such as automobiles and car parts. However, businesses and political leaders on both sides have expressed concerns about the execution and challenges associated with the agreement's implementation.
