US Threatens Tariffs on EU Olive Oil Imports

The United States has pro­posed tar­iffs on $11 bil­lion worth of European Union imports, includ­ing olive oil, in light of a deci­sion made ear­lier this week by the World Trade Organization.

The esca­la­tion of ten­sions between the two comes after a WTO rul­ing that found E.U. sub­si­dies for Airbus have an adverse impact on American pro­ducer, Boeing.

“This case has been in lit­i­ga­tion for 14 years, and the time has come for action,” Robert Lighthizer, the U.S. trade rep­re­sen­ta­tive, said. ​“The admin­is­tra­tion is prepar­ing to respond imme­di­ately when the WTO issues its find­ing on the value of U.S. coun­ter­mea­sures.”

The E.U. has crit­i­cized the U.S., say­ing $11 bil­lion was a greatly exag­ger­ated fig­ure.

“The E.U. is con­fi­dent that the level of coun­ter­mea­sures on which the notice is based is greatly exag­ger­ated,” a source within the bloc told CNBC News. ​“The amount of WTO autho­rized retal­i­a­tion can only be deter­mined by the WTO-appointed arbi­tra­tor.”

However, olive oil pro­duc­ers could be among the hard­est hit, as more than one-third of olive oil exports are des­tined the the U.S.

The level of tar­iffs that the U.S. could impose on E.U. goods is still in arbi­tra­tion and will not be deter­mined for a few months. However, European olive oil pro­duc­ers could expect tar­iffs rang­ing from $0.034 per kilo­gram to $0.176 per kilo­gram, depend­ing on the rul­ing.

“The U.S. threat to impose an import tar­iff on E.U. olive oil could prove sig­nif­i­cant for the E.U. indus­try, as the U.S. imports sig­nif­i­cant vol­umes from the bloc,” Gary Howard, a senior news ana­lyst for agribusi­ness intel­li­gence firm IEG Vu, said.

According to Eurostat, 35 per­cent of E.U. olive oil exports were des­tined for American ports dur­ing the first fis­cal quar­ter of 2019, with an esti­mated value of $339 mil­lion.

Spain led the way, export­ing 35,323 tons. This was fol­lowed closely by Italy with 30,898 tons. Portugal and Greece exported 1,410 tons and 3,506 tons, respec­tively.

During the 2017/18 har­vest sea­son, E.U. coun­tries exported 194,570 tons of olive oil to the U.S., with an esti­mated value of roughly $1 bil­lion.

Italian pro­duc­ers will likely be the hard­est hit, accord­ing to Ettore Prandini, pres­i­dent of Coldiretti. Nearly half of all Italian olive oil that was exported in the first fis­cal quar­ter of 2019 wound up in the U.S. Last year, Italy exported $436 mil­lion worth of the prod­uct state­side.

“It is a ques­tion of avoid­ing a clash of unprece­dented and wor­ry­ing sce­nar­ios that risks caus­ing a dan­ger­ous avalanche effect on the econ­omy, and on rela­tions between allied coun­tries,” Prandini said of the pro­posed tar­iffs.

Spanish and Greek pro­duc­ers will also be con­cerned about them as roughly one-third and one-half of their olive oil exports head to the United States, respec­tively.

Portugal and other E.U. pro­duc­ers will have less to fear as the bulk of their olive oil is exported else­where in the world, most notably Brazil and the Middle East.

• CNBC News


• IEG Vu