WTO Airbus ruling: Eucolait slams punitive tariffs imposed on EU dairy products by US

11 Dec 2019 --- Eucolait, the European association of dairy trade, has condemned the imposition of punitive tariffs on EU dairy products by the US as a result of the World Trade Organization (WTO) Airbus ruling. Since October 18, an additional 25 percent duty has been applied by the US on a wide range of EU dairy tariff lines (in particular, cheese and butter) from almost all member states, as a penalty for the illegal subsidies obtained by the European Airbus aircraft manufacturer. “Disputes relating to aircraft subsidies should be resolved within that industry,” asserts the association.

“We have already received reports from exporting companies of the damage these tariffs have caused for themselves and for their US counterparts, with contract conclusions being delayed, noticeably lower volumes being shipped and retailers both delisting product lines and postponing the listing of new product lines,” stresses Eucolait.

Last month, the European Parliament (EP) asserted that hard-hit agricultural sectors in the EU urgently need a package of support measures to mitigate the negative impacts of US tariffs and the long-standing Airbus/Boeing dispute. The EU must act swiftly to help EU farmers unduly affected by newly imposed US tariffs worth €6.8 billion (US$7.5 billion), underscores the EP.

Products most impacted by the punitive tariffs are those with a high added-value and which are often protected under EU quality schemes.Next to European dairy, products most impacted by the tariffs are those with a high added-value and which are often protected under EU quality schemes, such as wines, spirits and olive oil. Others include table olives, pork meat, coffee, biscuits, processed fruit, citrus, mussels and liquors.

Companies have also had to come up with arrangements to split the costs involved with these new tariffs for contracts that were concluded prior to the announcement of the Airbus decision at WTO level. For contracts concluded after the announcement of the tariff increases, companies must engage in difficult negotiations with buyers as regards who should take on the burden of these extra costs. “In summary, importers in the US are very hesitant and business is certainly not conducted in a normal manner,” Eucolait outlines.

With the publication of the WTO panel report on compliance on December 2, and the finding that the EU has neither demonstrated the withdrawal of subsidies nor taken appropriate steps to offset the adverse effects, the United States Trade Representative (USTR) has now launched a procedure to assess whether tariffs should be increased further and additional products subjected to tariff increases.

“The US is our main export market for both cheese and butter by far, with a total value exceeding €1 billion per year. Further tariff hikes would represent a serious blow to the European dairy sector which is already caught in the crossfire in unrelated trade disputes, has had to adjust to the loss of its main export market Russia and is currently facing the consequences of a potential hard Brexit,” Eucolait emphasizes.

When the Airbus conflict first escalated in October, repercussions of the spat were adjunctly slammed by the European Dairy Association (EDA) as “collateral damage of an airborne fight.” Under the new levied tariffs on European fine cheeses and other goods, sector players underscore significant losses for consumers. A shared sentiment across EU industry remains pronounced in today’s trading climate – there may be more losers than winners in this ongoing dispute.

“I cannot see any reason for US cheese aficionados to pay for the aircraft battle. They would have to pay higher prices for dairy products imported from the EU member states involved in the airbus project [France, Germany, Spain and the UK],” Alexander Anton, Secretary General of the EDA, told FoodIngredientsFirst at the time. 

“We therefore urge the European Commission to push for solutions which will reverse this tariff imposition and prevent the situation from escalating further,” concludes Eucolait.

By Benjamin Ferrer