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

Summary

The Italian Association of the Olive Oil Industry warns that American tar­iffs on European olive oil imports could cost Italian pro­duc­ers up to $200 mil­lion annu­ally, poten­tially lead­ing to a 50 per­cent drop in exports to the United States if the World Trade Organization approves the pro­posed tar­iffs. The U.S. Trade Representative is con­sid­er­ing includ­ing olive oil and var­i­ous types of olives in the list of prod­ucts sub­ject to increased duties in response to a dis­pute with the European Union over Airbus sub­si­dies, which could have sig­nif­i­cant impli­ca­tions for Italy as one of the largest sup­pli­ers of olive oil to the U.S.

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.

“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.

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.

“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.

• Assitol


• U.S. Trade Representative