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Italian Producers Could Lose $200M if U.S. Tariffs Approved, Trade Group Warns

The Italian olive oil association warns that olive oil prices could double as a result of the tariffs, which have the potential to cut Italian oil exports to the U.S. by 50 percent.

Later this summer, the WTO will decide whether to approve all or some of the proposed US tariffs on EU goods
Jul. 17, 2019
By Daniel Dawson
Later this summer, the WTO will decide whether to approve all or some of the proposed US tariffs on EU goods

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The Ital­ian Asso­ci­a­tion of the Olive Oil Indus­try (Assi­tol) has warned that pro­duc­ers in the coun­try could lose up to $200 mil­lion a year if Amer­i­can tar­iffs on olive oil imports from the Euro­pean Union are approved.

Anna Cane, Assi­tol’s pres­i­dent, said that exports to the United States could fall by as much as 50 per­cent if the World Trade Orga­ni­za­tion (WTO) approves the pro­posed tar­iffs. The gov­ern­ing body for inter­na­tional trade is set to make its deci­sion later this sum­mer on whether to approve some or all of the pro­posed tar­iffs.

With less Euro­pean flow, which guar­an­tees the United States 80 per­cent of pack­aged oil, space will be given to the prod­ucts of our com­peti­tors.- Anna Cane, pres­i­dent of Assi­tol

If the United States Trade Rep­re­sen­ta­tive (USTR) office acted in accor­dance with these first indi­ca­tions, impos­ing ad hoc taxes, the entire chain of sup­ply would suf­fer seri­ous dam­age,” Cane said.

In fact, with a tax on 100 per­cent of the prod­uct, the price of extra vir­gin olive oil would [dou­ble], which would be unsus­tain­able for the U.S. con­sumer and, there­fore, induce buy­ers to look for olive oil else­where or iden­tify alter­na­tive oils,” she added.

See more: Olive Oil Trade News

The USTR kept olive oil on an updated list of puni­tive tar­iffs it plans to impose on the Euro­pean Union in rela­tion to a dis­pute over the trad­ing bloc’s sub­si­dies for Air­bus. Also included on the updated list were sev­eral types of pit­ted, non-pit­ted and stuffed green olives.

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The U.S. Trade Rep­re­sen­ta­tive is con­sid­er­ing the addi­tional list of prod­ucts… for inclu­sion on a final list of prod­ucts to be sub­ject to increased duties in con­nec­tion with the enforce­ment of U.S. rights in the WTO dis­pute against the Euro­pean Union,” the USTR said.

While olive oil was also included on the pre­vi­ous list, the four types of table olives had not been.

Italy is one of the largest sup­pli­ers of olive oil to the United States. Accord­ing to Assi­tol, Italy exported 94,000 tons of olive oil to the U.S. in 2018, which rep­re­sented 31 per­cent of America’s total olive oil imports and more than 50 per­cent of Italy’s total olive oil exports.

Cane had been hop­ing that olive oil would not be included on the updated list as a result of Amer­i­can depen­dence on imported oil. The U.S. imported more than 95 per­cent of the olive oil that was con­sumed in the 2018/19 har­vest year. Over­all, about 65 per­cent of Amer­i­can olive oil imports come from the Euro­pean Union.

The North Amer­i­can Olive Oil Asso­ci­a­tion, of which Assi­tol is an asso­ciate mem­ber, began cir­cu­lat­ing a peti­tion to remove olive oil from the list in May but was unsuc­cess­ful in doing so.

Cane wor­ries that if the tar­iffs are approved, Amer­i­can con­sumers will turn to North African and South Amer­i­can olive oil pro­duc­ers to fill the void.

A good part of the bot­tled extra vir­gin olive oil in U.S. super­mar­kets is imported from Italy,” Cane said. With less Euro­pean flow, which guar­an­tees the United States 80 per­cent of pack­aged oil, space will be given to the prod­ucts of our com­peti­tors, par­tic­u­larly among our com­peti­tors in North Africa, such as Tunisia and Morocco.”

Even assum­ing that, later, the duties are can­celed, it will be very dif­fi­cult to regain the lost mar­ket,” she added.

Lost mar­ket space is espe­cially con­cern­ing for Italy, which sold more than 50 per­cent of its olive oil exports to the United States last year. In com­par­i­son, Spain sold only about one-third of its olive oil exports to the U.S.

Until the WTO makes its deci­sion on whether or not to autho­rize Amer­i­can tar­iffs on the list of E.U. goods, there is not much that Ital­ian pro­duc­ers can do.

Assi­tol has for­mally writ­ten to Fedo­live, the Euro­pean fed­er­a­tion of olive oil pro­duc­ers, about the sit­u­a­tion, but it is unclear what exactly the pan-Euro­pean olive oil group will be able to do to mit­i­gate the dam­age either.

What is needed is a seri­ous posi­tion taken by Italy, to avoid the pos­si­ble effects of duties, pre­vent­ing its entry into force,” Cane said.

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