Tariffs Threaten Specialty Food Industry
By Lorrie Baumann
European cheeses and olive oils may be the next casualty in the Trump administration’s trade wars, and the Specialty Food Association is sounding the alarm. “Tariffs are not a legislative activity. No one has control over these,” said Ron Tanner, the SFA’s Vice President of Philanthropy, Government & Industry Relations at the American Cheese Society’s Annual Conference. “They come from the executive branch. No one can really control these things.”
Tariffs threatened by the Trump administration could be as much as 100 percent on virtually all cheeses, yogurts, kefirs, olive oils and a broad range of other products produced in the European Union and imported into the U.S. “It’s a big net that they’ve case, and it’s going to be every cheese and some of the charcuterie,” Tanner said. “A lot of pork products got included.”
The U.S. Trade Commission is currently taking public comments on the issue. The due date for submission of written comments on the proposal is August 5, when the U.S. International Trade Commission will hold a public hearing on the issue. Post-hearing rebuttal comments must be submitted by August 12. Written comments can be submitted at http://www.regulations.gov with docket number USTR-2019-0003.
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The tariff threat originates in a 14-year trade dispute between aircraft manufacturers Boeing and Airbus. Airbus is subsidized by the EU and four of its member states: France, Germany, Spain and the United Kingdom, and the U.S. filed a complaint about those subsidies to the World Trade Organization in 2004. In 2011, the WTO found that the EU provided $18 billion in subsidies to Airbus between 1968 and 2006 and that those subsidies caused Boeing to lose sales of more than 300 aircraft around the world. In response to the WTO judgment, the EU removed two minor subsidies but left the other unchanged and then granted Airbus an additional subsidy of more than $5 billion to help Airbus get its A350 XWB off the ground, according to the U.S. Trade Representative’s office. The U.S. complained about the EU’s failure to comply with the WTO’s finding, which resulted in an appellate finding that the EU subsidies to Airbus “have caused serious prejudice to U.S. interests,” according to the U.S. Trade Representative. Based on the appellate report, the U.S. requested authority to impose countermeasures worth $11.2 billion per year, and a WTO arbitrator is currently evaluating that request as well as the counter-argument advanced by the EU. The U.S. Trade Representative’s office expects that the WTO arbitrator will issue its report regarding the level of countermeasures that will be authorized later this summer. “The Administration is preparing to respond immediately when the WTO issues its finding on the value of U.S. countermeasures,” said U.S. Trade Representative Robert Lighthizer. “Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft. When the EU ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”
The proposed tariffs could have repercussions far beyond the higher prices that retailers will be forced to pass on to their customers. Although the tariffs won’t affect American cheese producers directly, it’s likely that the EU will impose retaliatory tariffs on American products, which could hurt companies that export cheese to Europe. Consumers could be disappointed and turned off cheese when they find fewer options in their favorite stores, according to Tanner. “It might mean that people buy less cheese, when they go to the cheese case and won’t see the stocks,” he said. “You can’t buy ahead on these cheeses because they are perishable.”
Although he doesn’t expect that the Specialty Food Association’s comments on the issue will stop the tariffs from taking effect, he’s expressing the specialty food industry’s objection to the proposal. “What we’re saying is that this is a dispute between aircraft companies, and small businesses should not be affected,” he said. “We’re picking on small ag businesses. That’s not the right way to go about doing it.”
