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The tariff mode for pharmaceuticals between the EU and the USA remains uncertain, despite the announcement of the new transatlantic trading agreement on Sunday.
The situation is especially susceptible to the EU: the United States imports large amounts of critical pharmaceuticals of the EU, while pharmaceutical companies based on the EU – especially in Ireland and Denmark – they largely depend on access to the US market.
Although the new trade agreement will officially enter into force on August 1, medicines will not be subject to a 15% duty imposed on most products imported by the European Union in the United States.
This does not mean that there will be no duties on drugs, since the United States still conduct studies of imported drugs to evaluate whether they threaten the US national security.
For this reason, pharmaceuticals were technically excluded from the official agreement, confirming various EU sources, since the United States could not decide on any decision on responsibilities that would occur only after the process is completed.
However, if the responsibilities are introduced after the study, the EU expects that the United States – under President Trump – will comply with the informal agreement reached during negotiations.
This includes 15% ceiling for tariffs, which the EU considers complex, which means that it should even be applied to products that are still under research, such as medicinal products and semiconductors.
“I believe that this obligation will be respected and respected in this case,” said EU Commissioner Marosh Shefchovich during the press conference after the agreement.
So what happens after August 1?
In the short term, nothing will change.
Despite previous reports that the United States will impose a 15% fee for pharmaceuticals, as well as in most EU products, this will not happen immediately.
“This Friday there will be no duties on medicinal products,” said the EU senior official, who participated in negotiations with President Trump in Scotland.
Most of the drugs that are sold between the EU and the USA currently benefit from the 0%tariff rate based on the framework of a rather preferred state (MFF). This corresponds to previous agreements on trade in the USA and the EU and the obligations of a public organization (WTO).
As a result, the exports of pharmaceuticals of the EU did not encounter tariff barriers when entering the US market – a situation that remained unchanged even after Trump was such a called “release day” of Trump when he announced the general duties for products.
UNDERSTANT OF THE American survey
Nevertheless, it is expected that duties on drugs will occur at some point.
The main uncertainty rotates around the ongoing review of Section 232, conducted by the Trump government.
This study, which was approved in accordance with the trade legislation of 1962, is aimed at evaluating it regarding whether the import of medicinal products (and other products as semiconductors) threaten, threaten US national security.
Research conclusions can lead to unilateral actions by the United States, including higher responsibilities or import restrictions, regardless of a wider trade agreement concluded yesterday.
“(During negotiations), President Trump wanted to clarify that they still have complete freedom to complete 232 investigations and as a result of choosing any political measures,” another EU negotiator said.
While EU officials cannot predict the result of a US survey, they believe that he is approaching him.
“These are two surveys – pharmaceutical products and semiconductors – which are close enough to completion,” one of the officials said.
If the United States imposes duties after the survey, the EU expects that they will be limited to 15% for both sectors, according to a political agreement reached during trade negotiations.
Drug rate in the EU
The EU strategy is clear: although Trump could not be legally committed to yesterday’s duties on medicinal products, while the research continues, the EU insisted 15% in all areas, having no exceptions to drug products.
A senior EU official added that this understanding is supported by a broader political obligation, including planned investments of pharmaceutical companies in the United States and the pressure of the industry on both sides of the Atlantic for closer cooperation.
“There is a clear understanding that investments, completion of the supply chain and joint research and development in the field of R&D should fall under a special 15%regime,” the official explained.
Nevertheless, the EU admits that this is not yet a legally obligatory obligation.
“Is this a legal obligation? No, not at that stage. This should be done by an executive decree as soon as the United States completes its investigation, ”the source continued.
Currently, both medicines and semiconductor products remain with a zero duty. On August 1, there will be no changes, but this can change as soon as the United States completes its study in section 232.