U.S. Importers of Automotive Parts & Vehicles Save Major Duties & Taxes

There are a number of ways that vehicle and automotive parts companies can lower the duty that they pay for items imported into the United States. While these strategies have been in existence for many years, the use of these strategies has grown tremendously in recent years given the increase in taxes imposed on various goods imported into the United States (especially those manufactured in China).

Tariff Classification and Engineering

Vehicle and automotive parts companies importing goods into the United States may be able to lower the duty that they pay for articles imported into the United States by changing the tariff classification that is used to enter these items. This can be done lawfully when the tariff classification being used is found to be incorrect or when slight changes are made to the design and manufacture of the articles at issue.

For example, in a ruling issued by U.S. Customs and Border Protection (“CBP”) in December of 2020, an importer successfully argued that its two-post vehicle lifts were classifiable as “Other lifting, handling, loading or unloading machinery” in heading 8528 of the tariff schedule as opposed to “Jacks [or] hoists of a kind used for raising vehicles” in heading 8525. CBP had previously ruled that the company’s lifts were classifiable as “jacks [or] hoists” but overturned its decision after finding that the articles did not “pull a vehicle up using a hook and chain or a rope” (which was the function of a hoist) and that they “raise[d] vehicles more than a short distance” (whereas a jack was designed to lift loads over short distances only).

Additionally, in a ruling issued by CBP in May of 2017, an importer successfully argued that an oil cooler core (which cooled automatic transmission fluid in semi-trucks equipped with an Allision transmission) was classifiable as a “part of [a] heat exchange unit” in heading 8419 rather than as a “part of a motor vehicle” in heading 8708. CBP looked to the section notes of the tariff schedule before finding that the importer was correct in its assessment that the oil cooler cores were classifiable as parts of heat exchange units. This change in tariff classification resulted in a 2.5% duty savings for the importer.

To help importers who may not have the bandwidth or know-how to fully engage in the classification process, Sandler Travis & Rosenberg, P.A. (“ST&R”) has professionals with extensive knowledge of the classification opportunities that exist for automotive parts and vehicles. ST&R works with importers by reviewing their current classifications to ensure their correctness and by suggesting design changes to current products that may result in substantial duty savings.

Companies requiring expert assistance in identifying potential alternative classifications for the products that they import should contact ST&R. Charles “Chuck” Crowley can be reached at (914) 433-6178 or [email protected] and Mika M. McLafferty can be reached at (212) 549-0165 or [email protected].

Strategic Manufacturing

The assessment of duties on goods imported into the United States is dependent on a product’s country of origin as much as its classification. The more recent implementation of additional duties of between 7.5% and 25% on certain goods that are Made in China has meant that the country of origin of products imported into the United States has become increasingly relevant.

Where vehicle and automotive parts companies are manufacturing a specific product in more than one country, ST&R can review manufacturing processes to determine the proper country of origin of that product. ST&R can advise companies as to what steps in the manufacturing process may confer origin to a product so that companies can strategically perform origin-conferring operations for a product in the country that provides the most favourable duty rate. In the case of goods being produced in part in China, it is imperative that companies understand whether the operations being performed in China are origin-conferring such that the finished product may be subject to additional duties of between 7.5% and 25% upon importation into the United States.

As an example, CBP has recently analysed the proper country of origin of motors that were manufactured in multiple countries including China. Importers of those items were interested in understanding whether CBP would consider the country of origin of those motors to be China in which case additional duties of 25% would apply to the products at the time of importation. As recently as May of 2021, CBP has issued rulings in which it has found that rotors and stators are the dominant components of finished electric motors and has found that the origin of a motor was determined by the origin of the rotor and stator cores.

Those interested in understanding how to strategically manufacture their product to avoid the potential assessment of Section 301 duties of between 7.5% and 25% should contact ST&R. Charles “Chuck” Crowley can be reached at (914) 433-6178 or [email protected] and Mika M. McLafferty can be reached at (212) 549-0165 or [email protected].

Recovery of Foreign Judgment Debts in Nigeria

Enforcement of foreign judgments has significant relevance in this era of increased international trade and foreign investments. Businesses are more comfortable doing business with foreign partners knowing that if they obtain judgment from a superior court in their home country; it can be enforced against the judgment debtor across borders. Fortunately, Nigerian courts recognise judgments from superior courts of commonwealth countries and countries with reciprocal treatment with Nigeria.

This has increased the confidence of foreigners and foreign companies to do business with Nigerians and Nigerian companies. Nevertheless, the procedure for registration of foreign judgment in Nigeria is not without challenges. Apart from the uncertainty in the statute and rules regulating the enforcement of foreign judgment, the procedure for registration of foreign judgments does not take into cognisance the evolving trends in global economy and international commerce.

The statute regulating the enforcing of foreign judgments in Nigeria is imprecise. Ordinarily the recent Foreign Judgment (Reciprocal Enforcement) Act, CAP 152, Laws of the Federation of Nigeria, 1990 (“the 1990 Act”) would have been the legislation regulating enforcement of foreign judgment but the Supreme Court in the case of Macaulay v R.Z.B of Austria (2003) 18 NWLR (Pt. 852) 282 held that the Minister of Justice has not made an order extending the Act to judgments of the United Kingdom and other countries with reciprocal treatment with Nigeria pursuant to Sections 3 (1) and 9 (1) of the Act as such the first part of Act is inapplicable.

Again, in the case of Grosvenor Casinos Ltd v Ghassan Halaoui (2009) 10 NWLR (Pt. 1149) 309, the Supreme Court postulated that both the Act and the Reciprocal Enforcement of Judgments Ordinance, CAP 175, Laws of the Federation of Nigeria, 1958 (“the Ordinance”) (“applicable legislations”) are relevant statutes in the enforcement of foreign judgments in Nigeria.

Judgment creditors now rely on the colonial Reciprocal Enforcement of Judgment Ordinance, 1958 (“the 1958 Ordinance”) which provides for a 12 months period to register and recover a foreign judgment debt in Nigeria. This is why in Suit No. FHC/ABJ/CS/203/2017; Emmanuel Ekpenyong Esq v. Attorney General and Minister of Justice of the Federation, I sought an order of mandamus at the Federal High Court, Abuja Division to compel the Attorney General and Minister of Justice of the Federation to promulgate an Order to bring the 1990 Act into operation.

The Federal High Court in its judgment opined that the Minister has discretionary powers to promulgate the Order. The trial court held that the Minister had unlimited powers to determine when to promulgate the Order. An appeal against the trial court’s judgment is pending before the Court of Appeal, Abuja division. The backlog of appeals at the appellate court has made it difficult to obtain a hearing date for the appeal.

The imprecision on the particular statute regulating foreign judgment enforcement has a devastating effect on the whole process of registering foreign judgment in Nigeria. For instance, the time within which to register a judgment under the 1990 Act is 6 years while the time to register a judgment under the Ordinance is 12 months. Since there is no Foreign Judgment Enforcement Rules for the 1990 Act, the Reciprocal Enforcement of Judgments Rules of the Ordinance (“Rules of the Ordinance”) which was enacted in 1922 regulates the legal conditions for registration of foreign judgment in Nigeria today.

Rules 1 (1) and 5 of the Rules of the Ordinance which provides that the application for enforcement of foreign judgment be made by a motion ex-parte is inconsistent with the modern concept of fair hearing and the current civil procedure rules of Courts that an adverse party must be put on notice. It is without doubt that the Rules of the Ordinance is out of touch with modern realities and the different conditions in the applicable legislations have led to calamity and more uncertainty.

In a Ruling of a Lagos High Court, per Candide-Johnson J, the Court rejected the registration of a Judgment of Justice Michael Burton of the High Court of Justice, Queen’s Bench Division, Commercial London on the ground that since the Lagos Court did not have jurisdiction to hear the subject matter before the original Court, it could not register and execute the Judgment of the original court against the judgment debtor. But registration of foreign judgment under the provisions of the applicable legislations appears to be a subject matter on its own. Little wonder the process of registration of foreign judgment is regulated by its separate and distinct legislations and rules which spell out its conditions and legal requirements.

The applicable legislations provide that Nigerian courts shall accord reciprocal treatment to judgment of ‘superior courts’ from commonwealth countries and other countries with reciprocal treatment with Nigeria. They also provide that a judgment creditor from a foreign country with reciprocal treatment with Nigeria may apply to a ‘superior court’ in Nigeria within the specified time for registration of the judgment. From the ordinary meaning of the wordings of the provisions of the applicable legislations on conditions for registration of foreign judgments, it did not contemplate that the jurisdiction of the Nigerian court to register a foreign judgment will be subject to its jurisdiction to hear and determine the original subject matter of the case.

Since the judgment creditor is not asking the Nigerian court to hear the case based on its subject matter, but to grant leave for registration of the foreign judgment under the applicable legislations only, Nigerian courts have no business making its jurisdiction to hear the subject matter of the case, a condition precedent for registration of the judgment. Unless the appellate courts pronounce on this grey area, it will continue to impede the registration of foreign judgments in Nigeria.

An interesting requirement of the applicable legislations is that the Defendant against whom the foreign judgment is to be enforced must have been a Defendant at the original court. This requirement creates a profound difficulty for Judgment creditors. With the recent economic meltdown, businesses are trying to stay afloat by merging or acquiring other companies. To maintain a local presence, a multinational company may take over the business and goodwill of viable Nigerian Company. Upon such takeover the acquired company is wound up.

What then happens to a judgment creditor who obtained a foreign judgment against the acquired company? Does it mean that the judgment creditor cannot maintain a cause of action against the acquiring company just because the acquiring company was not a Defendant at the original court? Since the acquiring company acquired both the assets and liabilities of the acquired company and the acquired company is no more, the justice of the case demands that the foreign judgment obtained against the acquired company should be enforced against the acquiring company.

Another curious requirement in both the Act and the Ordinance is that foreign judgments in respect of fine, taxes and penalties cannot be enforced in Nigeria. This is against the whole concept of reciprocal treatment of judgment because it may give a safe haven to impenitent tax evaders. With the increase in tax evasion by foreign businesses and multinational companies, inability of states and government bodies to recover judgment debts in respect of fines, taxes and penalties across borders would led to a great loss of revenue. The role of fines, taxes and penalties is invaluable in the economic development of states in the 21st Century. Unlike the 19th Century where most states closed their borders against foreign goods and investment, the 21st century world is a global village.

Though Section 1 (2) of the Foreign Judgments (Reciprocal Enforcement) Act 1933 (“the United Kingdom’s Act”) provides that taxes or other charges of a like nature or in respect of a fine or other penalty cannot be registered and enforced in United Kingdom, the United Kingdom Prime Minister David Cameron in a letter to Leaders of the British Overseas Territories (BOTs) and Crown Dependencies (CDs) dated 20 May 2013 said “… I very much welcome the commitments you have made to automatic tax information exchange, both on a bilateral and multilateral basis, which will help us to reach our goal of setting a global standard in tax transparency… We also need to ensure information exchange works effectively for all… That is why we strongly support the Multilateral Convention on Mutual Assistance in Tax Matters”.

This highlights the importance of cross border tax collection. Nigeria will gain more if it offers herself and other states the opportunity to recover fine, taxes and penalties against evading offenders by either amending her Foreign Judgment statutes to accord foreign judgments on fine, taxes and penalties the same status with monetary judgments or enter into Multilateral and Bilateral treaties with other states to assist themselves on recovery of cross borders fine, taxes and penalties.

Furthermore, the requirement that once an appeal is filed at the original court, the foreign judgment cannot be registered at the registering court may be prejudicial to the judgment creditor. What happens in a situation where an unscrupulous debtor in an attempt to forever deny the judgment creditor the fruits of his judgment files an appeal at the original jurisdiction and goes to sleep? What happens to the judgment creditor where the judgment debtor dissipates the res before outcome of the appeal at the original court? Is it not justiciable to preserve the res at the registering court pending the outcome of the appeal at the original jurisdiction? This is the reasoning behind the provisions of Section 1 (3) of the United Kingdom’s Act which provides that “a judgment shall be deemed to be final and conclusive notwithstanding that an appeal may be pending against it, or that it may still be subject to appeal, in the courts of the country of the original court”.

In conclusion, there is a need for the lingering crisis on the law regulating enforcement of foreign judgment in Nigeria to be settled. The legal conditions for enforcement of foreign judgment have been interpreted too broadly to adequately protect the interest of foreign judgment creditors. Therefore, the law and rules should be amended to reflect modern realities. The Courts should be proactive in breaking new grounds and developing the jurisprudence on enforcement of foreign judgment in Nigeria in accordance with the essence of reciprocity of judgments. This will improve the prospects of Nigeria as a business destination and enhance the growth of her economy.

Pinsent Masons bolsters its Trade Group in Düsseldorf

Pinsent Masons continues to expand its Competition, EU & Trade Group, with the appointment of competition law specialist, Prof. Dr. Hans Jürgen Meyer-Lindemann, as a partner in the Düsseldorf office.

Regarded as one of the leading competition practitioners in Germany, he joins from Dechert, where he was a senior partner. Hans Jürgen’s focus will be on clients within the Advanced Manufacturing & Technology (AMT) sector, including Life Sciences.

Hans Jürgen’s work includes handling high-profile merger control cases before the European Commission and national competition authorities; major cartel investigations in a variety of industries; and numerous litigation matters concerning both public and private enforcement before local and district courts, Germany’s Federal Supreme Court and the European courts.

Commenting on Hans Jürgen’s appointment, Alan Davis, Head of Competition, EU & Trade at Pinsent Masons said: “We are delighted to welcome Hans Jürgen to the Competition, EU & Trade Group. Hans Jürgen will work closely with the Head of our German Competition Team, Michael Reich in Munich. His outstanding reputation, track record and wealth of experience in German and EU competition law significantly strengthens our pan-European competition law practice advising on complex merger and anti-trust cases.”

Head of the Advanced Manufacturing & Technology (AMT) sector, Florian von Baum added: “Across the AMT sector, we are seeing more disputes with a competition law background and Hans Jürgen’s expertise means that we can support our clients as their needs develop and change. His skillset, knowledge and experience will enable us to deepen our ability to offer high quality competition law advice across the sector and I look forward to working with Hans Jürgen.”

His appointment follows the appointment of Robert Vidal, formerly head of Taylor Wessing’s UK competition team, in the Competition, EU & Trade Group in London and brings the number of partners in the Group across the UK and Germany to nine. The team is currently advising on EU, UK and German antitrust enforcement investigations in the pharmaceutical, financial services, construction and manufacturing sectors, as well as mergers and market investigations. The team is also advising on a variety of competition litigation matters, including follow-on and stand alone damages claims.

Duane Morris bolsters international trade capabilities

Geoffrey M. Goodale has joined Duane Morris LLP as a partner in the firm’s Corporate Practice Group in the Washington, D.C., office. The addition of Goodale enhances the firm’s international trade capabilities. Prior to joining Duane Morris, Goodale was a partner at FisherBroyles, LLP.

“Geoff is a key addition to our Corporate Practice Group,” said Matthew A. Taylor, CEO and Chairman of Duane Morris. “His extensive experience in the significant and always-evolving area of international trade is a crucial advantage for our global clients.”

“Geoff’s practice brings a key component of strength to our clients as they run their businesses in an increasingly interconnected world,” said Brian P. Kerwin, chair of the firm’s Corporate Practice Group. “His experience will be invaluable to our clients as they navigate the intricacies of a global supply chain.”

“We’re excited to have Geoff join us in Washington, D.C.,” said Patrick D. McPherson, managing partner of the Duane Morris Washington, D.C., office. “He will be a great addition to our office and the firm.”

For over 17 years, Goodale has assisted U.S. and non-U.S. entities of all sizes and in many industries in achieving their international business objectives in cost-effective ways. His practice focuses on export controls, economic sanctions, import compliance, trade litigation, international intellectual property rights protection, foreign direct investment, cybersecurity, anti-corruption, and government contracting matters.

Goodale counsels companies on a wide range of issues relating to the Export Administration Regulations (EAR) administered by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), the International Traffic in Arms Regulations (ITAR) enforced by the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC), and the economic sanctions laws and regulations administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). Additionally, he conducts internal investigations and audits to assess compliance in these areas.

Goodale also advises clients on all aspects of compliance with U.S. import laws and regulations, including those relating to determining the proper classification, valuation and country of origin of merchandise. He regularly represents clients in matters involving U.S. Customs and Border Protection (CBP), including assisting clients in preparing for and undergoing CBP audits. He also assists clients in developing duty-savings strategies through the effective use of duty drawback, foreign trade zones and subzones, preferential duty programs, and free trade agreements, including the North American Free Trade Agreement (NAFTA) and the Dominican Republic Central America-United States Free Trade Agreement (CAFTA-DR).

Goodale’s experience also includes representing both U.S. and non-U.S. companies in all manner of anti-dumping duty and countervailing duty cases before the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission (ITC), including investigations, administrative reviews, scope ruling requests and anti-circumvention proceedings, as well as in appeals of certain DOC and ITC decisions to the U.S. Court of International Trade and the U.S. Court of Appeals for the Federal Circuit. He also has represented complainants and respondents in trade-related intellectual property rights cases filed with the ITC under Section 337 of the Tariff Act of 1930, as amended, and appeals of certain such decisions to the CAFC.

Additionally, Goodale possesses extensive experience in advising clients on international mergers and acquisitions. With respect to acquisitions by foreign entities of U.S. companies, this experience includes, among other things: taking actions necessary to clear proposed deals through the Committee on Foreign Investment in the United States (CFIUS); filing required submissions with DDTC and/or BIS when export-controlled products and technologies are involved; and structuring transactions so as to mitigate foreign ownership, control or influence (FOCI) in a way that is acceptable to the Defense Security Service (DSS) in order for the U.S. company to maintain its Facility Security Clearance (FCL).

Goodale also provides compliance counseling to government contractors on a wide range of matters covered by the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS). In addition, he provides counseling to clients relating to the Foreign Corrupt Practices Act (FCPA) and conducts internal investigations to ensure that clients comply with the requirements of the FCPA and other anti-bribery laws, such as the UK Bribery Act.

A long-standing and active member of the American Bar Association (ABA), Goodale currently serves as co-chair of the ABA Section of International Law’s National Security Committee and vice-chair of the ABA Intellectual Property Law Section’s Business and Trade Division. He also currently is the chair of the Virginia State Bar’s International Practice Section and co-chair of the D.C. Bar’s International Trade Committee.

Goodale is a graduate of the George Washington University Law School (J.D., 2001), where he was a Dean’s Fellow and a notes editor for the American Intellectual Property Law Association Quarterly Journal. Prior to obtaining his J.D., Goodale obtained a M.A. in Government and a B.A. in Russian Studies and Government (with honors) from the College of William and Mary.

About Duane Morris

Duane Morris LLP provides innovative solutions to today’s multifaceted legal and business challenges through the collegial and collaborative culture of its more than 800 attorneys in offices across the United States and internationally. The firm represents a broad array of clients, spanning all major practices and industries.

UK and China trade relations championed by investment minister visit

International Trade Minister Graham Stuart MP travels to China today, to bolster the trade relationship between the UK and China post-Brexit.

Beginning his visit in the Chinese capital Beijing, the Minister will meet with key representatives in the Chinese government in the Ministry of Commerce and officials at the Chinese National Development and Reform Commission (NDRC), to promote the UK-China economic relationship and champion British business in the region.

While in China, he will meet with dozens of potential investors, hosting roundtables with Chinese life sciences, education, infrastructure and financial services businesses, to promote the strengths of the UK as an investment destination and encourage stronger trade ties between the two countries.

The visit will see Minister Stuart lead a 200-strong delegation of UK business leaders representing sectors such as tech, manufacturing, transport and education to the Smart China Expo in Chongqing , where he will champion the UK’s global leadership in smart technology, and attend the UK’s flagship pavilion at the Horticulture Expo in Beijing, where the UK is showcasing its leadership in clean energy and sustainable development.

The 10-day visit comes as trade and investment with China reaches record levels, bilateral trade between the 2 countries has more than doubled over the past 10 years, with the latest statistics showing trade has succeeded the £70bn mark for the first time during the last financial year.

Over the last decade, China has been the 3rd biggest contributor to the overall increase in British exports, beaten only by Germany and the USA.

Speaking ahead of his visit, the Minister for Investment Graham Stuart said:

China is a world-leading economy and the UK’s largest trading partner outside of Europe and North America, holding unparalleled opportunities for UK businesses.

Britain is committed to strengthening the UK-China trading relationship to ensure UK firms are poised to seize the opportunities the region offers as our trading relationship continues to blossom.

I hope my visit will be instrumental to winning investments into the UK , while opening up new opportunities for UK firms and fostering greater partnerships between our two great nations.

The Minister’s visit follows on from the UK-China 10th Economic and Financial Dialogue (EFD) which took place in London in June this year.

The EFD saw the former Chancellor, Philip Hammond, and Chinese Vice Premier, Hu Chunhua, launch the London-Shanghai Stock Connect UK, which allowed listed companies to sell their shares in China for the first time, alongside the announcement of £500 million worth of commercial deals and partnerships.

Minister Stuart’s visit is expected to secure a number of commercial deals and new partnerships between British and Chinese businesses.

EU and Mercosur reach agreement on trade

The EU is the first major partner to strike a trade pact with Mercosur, a bloc comprising Argentina, Brazil, Paraguay and Uruguay. The agreement concluded today will cover a population of 780 million and cement the close political and economic relations between the EU and Mercosur countries. It represents a clear commitment from both regions to rules based international trade and will give European companies an important head start into a market with an enormous economic potential. It will anchor important economic reforms and modernisation undergoing in Mercosur countries. The agreement upholds the highest standards of food safety and consumer protection, as well as the precautionary principle for food safety and environmental rules and contains specific commitments on labour rights and environmental protection, including the implementation of the Paris climate agreement and related enforcement rules.

President of the European Commission Jean-Claude Juncker said: “I measure my words carefully when I say that this is a historical moment. In the midst of international trade tensions, we are sending today a strong signal with our Mercosur partners that we stand for rules-based trade. Through this trade pact, Mercosur countries have decided to open up their markets to the EU. This is obviously great news for companies, workers and the economy on both sides of the Atlantic, saving over €4 billion worth of duties per year. This makes it the largest trade agreement the EU has ever concluded. Thanks to the hard and patient work of our negotiators, this is matched with positive outcomes for the environment and consumers. And that’s what makes this agreement a win-win deal.”

Commissioner for Trade Cecilia Malmström added: “Today’s agreement brings Europe and South America closer together in a spirit of cooperation and openness. Once this deal is in place, it will create a market of 780 million people, providing enormous opportunities for EU businesses and workers in countries with whom we have strong historical links and whose markets have been relatively closed up to now. The agreement will save European companies over €4 billion in duties at the border – four times as much as our deal with Japan – whilst giving them a head start against competitors from elsewhere in the world. It also sets high standards and establishes a strong framework to jointly address issues like the environment and labour rights, as well as reinforcing sustainable development commitments we have already made, for example under the Paris Agreement. Over the past few years the EU has consolidated its position as the global leader in open and sustainable trade. Agreements with 15 countries have entered into force since 2014, notably with Canada and Japan. This agreement adds four more countries to our impressive roster of trade allies.”

Phil Hogan, Commissioner for Agriculture and Rural Development, said: “The EU-Mercosur agreement is a fair and balanced deal with opportunities and benefits on both sides, including for Europe’s farmers. Our distinctive, high quality EU agri-food products will now get the protection in Mercosur countries that they deserve, supporting our market position and growing our export opportunities. Today’s agreement also presents some challenges to European farmers and the European Commission will be available to help farmers meet these challenges. For this agreement to be a win-win, we will only open up to agricultural products from Mercosur with carefully managed quotas that will ensure that there is no risk that any product will flood the EU market and thereby threaten the livelihood of EU farmers.”

Main features of the EU-Mercosur trade agreement:

The EU-Mercosur region-to-region agreement will remove the majority of tariffs on EU exports to Mercosur, making EU companies more competitive by saving them €4 billion worth of duties per year.

  • As regards EU industrial sectors, this will help boost exports of EU products that have so far been facing high and sometimes prohibitive tariffs. Those include cars (tariff of 35%), car parts (14-18%), machinery (14-20%), chemicals (up to 18%), pharmaceuticals (up to 14%), clothing and footwear (35%) or knitted fabrics (26%).
  • The EU agri-food sector will benefit from slashing existing Mercosur high tariffs on EU export products, chocolates and confectionery (20%), wines (27%), spirits (20 to 35%), and soft drinks (20 to 35%). The agreement will also provide duty-free access subject to quotas for EU dairy products (currently 28% tariff), notably for cheeses.

Mercosur countries will also put in place legal guarantees protecting from imitation 357 high-quality European food and drink products recognised as Geographical Indications (GIs), such as Tiroler Speck (Austria), Fromage de Herve (Belgique), Münchener Bier (Germany), Comté (France), Prosciutto di Parma (Italy), Polska Wódka (Poland), Queijo S. Jorge (Portugal), Tokaji (Hungary) or Jabugo (Spain).

The agreement will open up new business opportunities in Mercosur for EU companies selling under government contracts, and to service suppliers in the information technology, telecommunications and transport sectors, among others. It will simplify border checks, cut red tape and limit the use of export taxes by Mercosur countries. Smaller companies on both sides will also benefit thanks to a new online platform providing easy access to all relevant information.

While delivering significant economic benefits, the agreement also promotes high standards. The EU and Mercosur commit to effectively implement the Paris Climate Agreement. A dedicated sustainable development chapter will cover issues such as sustainable management and conservation of forests, respect for labour rights and promotion of responsible business conduct. It also offers civil society organisations an active role to overview the implementation of the agreement, including any human rights, social or environmental concerns. The agreement will also provide for a new forum to work closely together on a more sustainable approach to agriculture and, as part of the political dialogue under the Association Agreement, address the rights of indigenous communities. The agreement also safeguards the EU and Mercosur’s right to regulate in the public interest and preserves the right to organise public services in the way they consider appropriate.

EU food safety standards will remain unchanged and all imports will have to comply with the EU’s rigorous standards, as is the case today. The agreed food safety, and animal and plant health provisions will reinforce cooperation with the authorities of the partner countries and speed up the flow of information about any potential risks through a more direct and efficient information and notification system. In this way, the agreement will increase our efficiency in ensuring the safety of the products traded between the EU and Mercosur countries.

The trade agreement reached today is part of a comprehensive new Association Agreement under negotiation between the EU and Mercosur countries. It is composed of a political and cooperation pillar – on which negotiators already reached a general agreement in June 2018 in Montevideo – and the trade pillar. Beyond trade, the agreement will enhance political dialogue and increase cooperation in areas such as migration, digital economy, research and education, human rights, including the rights of indigenous people, corporate and social responsibility, environment protection, ocean governance, as well as fight against terrorism, money laundering and cybercrime. It will also offer increased possibilities for cooperation at multilateral level. The Association Agreement will complete the network of Association Agreements in the Americas and consolidate the relations with the important partners in the region, supporting EU positions on many global issues.