US launches tariff probe against Germany under Section 301 over drug pricing | What does it mean for Berlin?
The United States Trade Representative (USTR), Jamieson Greer, announced on Thursday (local time) that Washington has launched a trade investigation. The probe targets what it
The United States Trade Representative (USTR), Jamieson Greer, announced on Thursday (local time) that Washington has launched a trade investigation. The probe targets what it calls “persistent underpayment for innovative pharmaceutical products,” and could pave the way for retaliatory trade measures. In a press release, the USTR said the investigation has been launched under Section 301 of the Trade Act of 1974. It will examine whether Berlin's persistent underpayment of innovative pharmaceutical products is unreasonable or discriminatory and whether it burdens or limits US commerce. The announcement follows months of substantive discussions between Washington and its partners in Berlin. Also Read | Why Piyush Goyal thinks India shouldn't worry about US Section 301 Why is US launching an investigation against Germany? The investigation against Germany, the sort of which Washington has already launched into dozens of other countries, comes after Berlin's Ministry of Health announced in April its plans for a wide-ranging overhaul of the country's statutory healthcare system to bring down a looming funding gap of 20 billion euros ($23 billion), Reuters reported.
The proposal sought to implement a system of variable discounts for pharmaceutical products, but is being withdrawn after facing sharp opposition from the pharmaceutical industry. Since returning to the White House for a second term last year, US President Donald Trump has pursued a hardline trade strategy, introducing a 10% baseline tariff on imports and warning of tariffs as high as 100% on goods from countries including China and France. Earlier this month, the Trump administration also unveiled plans for tariffs of up to 12.5% on imports from around 60 nations, after a Section 301 probe that concluded those countries had not done enough to prevent trade involving goods allegedly produced with forced labour. If the ongoing investigation reaches a similar conclusion, it could pave the way for the United States to impose tariff measures on imports from Germany. What did Jamieson Greer say?
The USTR said that Trump has made it clear that patients in America should not be shouldering a disproportionate share of global pharmaceutical research and development. He added, "I am particularly concerned with news that Germany is fast-tracking legislation that would further reduce its spending on innovative pharmaceuticals. This is a serious step backwards at a time when our trading partners need to step up and start paying their fair share to fund innovative pharmaceutical research and development." Expressing belief that the matter could be resolved, Greer said, "We believe that the United States and Germany can find a path forward that expands access to the most innovative drugs for the German people while ensuring fair reimbursement for the pharmaceuticals made by American workers." Reuters reported that Greer's office will also open a docket for submission of written comments on 25 June, and its Section 301 Committee will hold a public hearing on the probe in September.
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