Persian Gulf Shipments of Jet Fuel to EU to Remain Duty-Free

The European Union said its imports of jet fuel from Persian Gulf countries including Saudi Arabia will remain duty-free after this year because air-services agreements exempt the shipments from levies.

The European Commission’s assertion seeks to end weeks of confusion over whether the EU would apply its 4.7 percent import duty for aviation fuel to countries that are due to lose EU tariff benefits in 2014. Nations including Saudi Arabia, Oman, the United Arab Emirates, Kuwait and Bahrain are scheduled to be stripped of tariff privileges granted under the EU’s Generalized System of Preferences, or GSP, because of gains in national wealth.

“Some 1,500 binding air-services agreements exist between EU member states and third countries,” John Clancy, a trade spokesman at the commission, the 28-nation EU’s executive arm in Brussels, said today in an e-mailed reply to questions. “These agreements include provisions exempting jet fuel from duties and taxes, disregarding its origin. Hence, jet-fuel imports from the Gulf countries are exempt from paying duties, irrespective of the changes in the EU’s GSP.”

The Association of European Airlines had argued that jet fuel imported from Gulf countries should remain exempt from the EU’s 4.7 percent tariff after 2013 because aviation accords between individual EU countries and those suppliers guarantee no levies on the fuel.

AEA members, which include Air France-KLM (AF) Group, Deutsche Lufthansa AG (LHA) and British Airways, spend 35 billion euros ($46.5 billion) a year on jet fuel, a sum equal to around 35 percent of their annual costs, Athar Husain Khan, acting secretary general of the Brussels-based association, said by phone on July 17.

To contact the editor responsible for this story: Jonathan Stearns at jstearns2@bloomberg.net

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