European farm products face new tariffs


Issue Date: October 9, 2019
By Ching Lee
After winning an arbitration award worth $7.5 billion set by the World Trade Organization, the U.S. plans to impose new tariffs of 25% on a variety of agricultural goods from the European Union starting Oct. 18. EU farm products facing the new import tariffs include unprocessed table olives, olive oil, canned peaches, cheeses and wine.
Graphic/Paula Erath

Some farm groups have praised the Trump administration for its plan to place new tariffs on a variety of agricultural goods from the European Union after the U.S. won an arbitration award in a long-running trade dispute—though others expressed concern about eventual retaliation.

A World Trade Organization ruling last week gives the U.S. the green light to begin imposing tariffs on $7.5 billion worth of European imports, including certain agricultural products, as retaliation for EU subsidies of the aerospace company Airbus. The Office of the U.S. Trade Representative said it would begin levying the duties Oct. 18.

European food and farm products subject to additional import duties of 25% include wine, cheese, butter, yogurt, whey protein concentrates, raw table olives, olive oil, preserved peaches, pears, cherries and mixed fruit; fresh and dried oranges, mandarins, clementines and lemons; prune, pear and cherry juices; and pork.

The tariffs target imports from EU member countries, with the bulk being applied to imports from France, Germany, Spain and the United Kingdom, the four countries responsible for the illegal subsidies, according to USTR.

The U.S. arbitration award represents the largest in WTO history, although it is far less than the $25 billion of annual damages the U.S. estimated. The U.S. had proposed imposing tariffs of up to 100% on a list of items prepared earlier this year. USTR said it could still apply 100% tariffs on affected products and could increase the tariffs at any time, but for now has limited the tariffs on EU agricultural products to 25%.

The Olive Growers Council of California, which had sought the tariffs, said the WTO action and new tariffs will have "a positive impact on the California ripe olive industry," as it closes a "loophole" Spanish olive companies have been using to evade U.S. anti-dumping and countervailing duties set last year on ripe table olives. The new duties now cover bulk raw olives.

The council asked for the tariffs after Walnut Creek-based Bell-Carter Foods terminated a majority of its grower contracts in favor of importing more olives from Spain, Portugal and elsewhere. The company said it decided to increase its global sourcing to ensure its competitiveness.

For years, California table olive growers and processors have contended that subsidized olives from Spain, the world's top producer, have eroded their market share, first by saturating the U.S. food-service market and in more recent years by seizing a large portion of the retail segment.

"History will recognize (the U.S. tariff action) as the final critical step needed to put the U.S. table olive industry on a level playing field with Spain," said Glenn County olive grower Michael Silveira, who chairs the Olive Growers Council.

Tim Carter, CEO of Bell-Carter, which opposed the tariffs, said he remains confident the company's "current inventory and global supply chain will help Bell-Carter Foods deliver on our mission to provide the highest-quality olives at the best possible price for our customers and consumers."

Rich Hudgins, president and CEO of the California Canning Peach Association, which sought tariffs on EU canned peaches, also commended the U.S. countermeasures, saying the U.S. peach-canning business has "suffered losses from decades of EU canned fruit subsidies."

Though China remains the largest U.S. source of canned fruit, Hudgins noted canned peaches from Greece continue to make up 15% to 20% of total U.S. canned peach imports. With U.S. imports of canned fruit from China now subject to an additional 25% tariff, he said Greece has another incentive to expand shipments to the U.S. market.

"Subsidized canned fruit imports from the EU and other origins have caused major contractions in our industry, including the recent shuttering of a large California peach cannery, resulting in several hundred job losses," Hudgins added.

Other California farm groups reacting to the EU tariff announcement include California Citrus Mutual, which said placing a 25% tariff on EU oranges, mandarins, clementines and lemons will benefit California citrus growers.

"(The new tariffs) could positively affect the first quarter of the California citrus season," the group said.

The National Milk Producers Federation, which also voiced support for imposition of retaliatory duties on EU products, called the action "a clarion call for fair trade and an indication that trade must be a two-way trade."

The group also encouraged U.S. trade authorities to address EU use of geographical indications designed to protect its regional foods. The GIs, the federation said, limit competition from U.S. cheese exporters that use common food names such as parmesan, feta and asiago.

Saying that it has always supported "fair, open and reciprocal trade of wine around the world," the Wine Institute said it opposes the new tariffs on EU wine, adding that it worries the tariffs "will lead to increased tariffs on U.S. wines and set back our efforts to continue growing U.S. wine exports."

The institute also said it has not changed its position since the early 2000s that "wine should not be targeted for retaliation in trade disputes involving products other than wine and has urged all governments to adhere to this principle."

The EU has won a similar case against the U.S. and awaits a WTO decision on damages caused by U.S. subsidies to Boeing. The WTO is expected to issue its ruling in several months, at which time the EU would be authorized to hit back with its own tariffs. The two sides could also reach a settlement that would avoid further tit-for-tat tariffs, trade experts say.

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.