CEMA welcomes the scope of the potential cooperation on conformity assessment and the elimination of tariffs for industrial goods

Position on EU-US: Call for proposals for regulatory cooperation activities

As the European agricultural machinery industry association, CEMA represents over 4,500 manufacturers, both large multinational companies and European small and medium-sized enterprises (“SME”s), through 11 national member associations. CEMA members produce more than 450 different machine types and generate an aggregated turnover of more than EUR 26 billion. 135,000 people are directly employed in the sector, with a further 125,000 people working in distribution and maintenance.

CEMA welcomes the new free trade agreement talks between the European Union and the United States following President Junker and President Trump’s Joint Statement last July in Washington D.C. CEMA also welcomes the scope of these negotiations on conformity assessment and the elimination of tariffs for industrial goods.

In recent years, CEMA actively contributed to the former TTIP negotiation process and participated as a formal stakeholder during the fifth, six and seventh round of TTIP consultations with the EU and US chief negotiators. On these occasions, CEMA published several position papers which are still relevant for the new EU-US negotiations, though the political and international context has changed over the past two years.

CEMA hopes that current trade tensions between the EU and US deescalate through constructive dialog and a positive trade agenda in order to avoid a cycle of restrictive measures. Trade restrictions between the largest economic and most integrated trade partners in the world would only harm American and European consumers, farmers, workers as well as manufacturers.

The EU and US markets for agricultural machinery are closely interconnected as several manufacturers produce equipment in both markets. In addition, many European companies export machinery produced in Europe to the US and vice versa. The key barriers that hamper trade in agricultural machinery between the EU and the US are mainly regulatory divergences and technical barriers to trade (TBT). High tariffs are less an issue for the agricultural equipment manufacturers than for other industries as they tend to no-tariff for mounted-equipment and 5% tariff as an average for parts and components. However, the US’s imposition of Section 232 tariffs on steel (25%) and aluminium (10%) imports has negatively impacted agricultural equipment manufacturers with globally integrated supply chains due to increased steel and aluminium prices.

These tariffs remain an obstacle to a successful conclusion of the current talks as does the threat of new Section 232 tariffs on autos and auto parts, which could have a significant impact on agricultural equipment manufacturers as many components and parts share common tariff codes with auto parts. The July Joint Statement makes clear that current talks are based on the condition that the US will impose no new tariffs or taxes on EU exports, including on autos and auto parts. EU Commissioner Malmström has also clearly stated that the conclusion of negotiations on the elimination of industrial tariffs is dependent on the US lifting its current measures on EU steel and aluminium, in place since June 2018.

CEMA supports the joint declaration and any future EU-US harmonisation of the use of international standards as the key barriers hampering EU-US agricultural machinery trade are technical barriers to trade (“TBT”). 

To make a future EU-US FTA successful for our industry, CEMA believes it is essential to remove existing TBTs and achieve a greater and coordination of relevant regulatory provisions between the EU and US as part of the agreement.