INTRODUCTION Contributed by: Lincoln Tsang, Ropes & Gray LLP
EU countermeasures The EU and the other US allies have already introduced a series of countermeasures. Trade measures and countermeasures were imposed by the EU (in 2018 and 2020 respectively) dur- ing the first Trump administration, primarily in response to the US tariffs on European steel and aluminium exports. These EU countermeasures were structured into two sets of measures, each affecting different product categories. The EU measures and countermeasures introduced in 2018 and 2020 were subsequently suspended until 31 March 2025 or otherwise will be reacti- vated on 1 April 2025 to give the USA and the EU the opportunity to work out a longer-term solu- tion. In response to the new US trade measures on European goods of 12 March 2025, on the same day the EC defended European interests in response through two sets of counter-meas- ures – namely, the reimposition of the suspend- ed 2018 and 2020 rebalancing measures, and the imposition of a new package of additional measures. The EU’s trade countermeasures were initiated by the EC according to the EU Enforcement Regulation 2014, which enables the EU to sus- pend concessions or other obligations under international trade agreements with the inten- tion of rebalancing concessions or other obliga- tions in trade relations with third countries when the treatment accorded to goods from the EU is altered to such an extent that affects the EU’s interests. This rebalancing of concessions or other obliga- tions is permissible under international trade law as now reflected in EU law. Specifically, a mem- ber of the WTO can apply a safeguard measure or seek an extension of a safeguard measure based on objective criteria (defined in EU law) in order to suspend tariff concessions and to
impose new or increased customs duties. These objective criteria set out in EU law are: • effectiveness in inducing compliance of third countries with international trade rules; • potential to provide relief to economic opera- tors within the EU affected by third-country measures; • availability of alternative sources of supply for the goods concerned in order to avoid or minimise any negative impact on downstream industries, contracting authorities, entities, or final consumers within the EU; • avoidance of disproportionate administrative complexity and costs in the application of the measures; and • any specific criteria that may be established in international trade agreements. Impact on life sciences and healthcare sector The uncertainty surrounding the trade tariffs will likely increase the costs on goods and hence increase price spikes, disrupt the supply chains, and bring about serious supply shortages. This is particularly impactful for the life sciences and healthcare sector, which has relied upon on international trade and an interconnected global economy in order to research, develop and manufacture healthcare products – particu- larly essential and critical medicines, as well as healthcare products that global citizens have taken for granted. Supply shortages will have seriously momentous consequences on public health and patient care. The COVID-19 pandem- ic also emphasised the increasing interdepend- ency and interconnectivity of various geograph- ical regions in providing raw materials for the manufacture and distribution of critical public health countermeasures for hospitals, including prophylactic vaccines and personal protective clothing.
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