Trade, Innovation, and Productivity
On March 5, the European Union and the United States agreed to suspend all retaliatory tariffs on bilateral exports for a four-months period following a longstanding dispute over illegal aircraft subsidies to Airbus and Boeing companies. The US and EU will respectively suspend tariffs on USD 7.5 billion and USD 4 billion of bilateral exports. The EU export products covered by this suspension include airplanes, parts of airplanes, agricultural and food products (such as oil, beverages, cheese, milk, meats, and butter), machinery, equipment, and wearing apparel. The aggregate effects of the suspension are not expected to be significant as the tariffs applied to only 1.5% and 1.2% of the EU and US bilateral export, respectively. The sectoral and region-specific impacts, however, may be more pronounced. For instance, France and Germany may benefit from this suspension as the US accounts for, respectively, 10.4% and 6.9% of their total aircraft and aircraft parts exports. Similar effects may be present in Dutch and French beverage and other drinks sectors where, respectively, 23% and 5.7% of the total exports went to the US in 2019.
Labour Market and Environment
On March 25, the European Commission presented a long-awaited Action Plan for the development of organic production in order to ensure higher incomes for farmers across the EU as well as animal welfare and consumers safety due to the EU organic logo. The plan aims to boost production and consumption of organic foods so that by 2030, at least 25% of farmland will be used for organic farming purposes. Alongside the Biodiversity Strategies, this component of the Green Deal’s “farm to fork” initiative is additionally targeted at increasing the organic aquaculture. The plan is divided into three interconnected components which follow not only the structure of the sustainable food supply chain but also on the ambitious targets of the European Green Deal through stimulation of the demand, convergence and reinforcement of the entire value chain, improvement of the organic farming contribution to environmental sustainability and assurance of the consumer trust.
Macro and Fiscal
On March 22, the Council of the EU approved the amendments to the directive on administrative cooperation (so called DAC7) that impose new information obligations for digital platforms operating in the EU. The objective of the legal changes is to improve the transparency of the EU tax rules applicable to digital platforms. With more information available for tax administrations, Member States will be better equipped to prevent shortfalls of tax revenue as a result of challenging traceability and detection of tax evasion in this sector. The amendments are one of the components of the mid-2020Tax Package for fair, efficient and sustainable taxation aimed at ensuring secure tax revenues for the Member States. At the same time when DAC7 was approved, the European Commission launched consultations on DAC8 which aims to define new rules on the reporting requirements and exchange of tax information on crypto-assets and e-money.