`Peru Must Lift Anti-Subsidy Duties on Italian and Spanish Olive Oil - Olive Oil Times

Peru Must Lift Anti-Subsidy Duties on Italian and Spanish Olive Oil

Apr. 5, 2013
Julie Butler

Recent News

Lima, Peru

A Peruvian tri­bunal has quashed anti-sub­sidy duties the coun­try had been impos­ing on imports of Italian and Spanish olive oil.

The Defense of Competition Chamber of Indecopi, the Peruvian author­ity on anti-dump­ing mea­sures and coun­ter­vail­ing duties, found that when the duties were approved in late 2010 there had not been the nec­es­sary proof that the imports risked harm­ing Peru’s olive oil indus­try.

Upholding an appeal by Spain and Italy, it revoked author­ity for the respec­tive duties of €0.95 and €1.05 applied to each kilo­gram of their olive oil imported into Peru.

Spain hopes other coun­tries take heed

Though their trade with Peru is rel­a­tively small — it imports just 300 tons of European olive oil a year (1) — the two coun­tries, with European Union (E.U.) sup­port, saw the issue as sig­nif­i­cant enough to pur­sue over what was a com­pli­cated and no doubt costly, two-year appeal process.

Rafael Picó, direc­tor of Asoliva, the Spanish Olive Oil Exporters Association, told Olimerca mag­a­zine the case set an impor­tant prece­dent that would serve as a ref­er­ence for other coun­tries.

Australia, Mexico and Argentina had already tried apply­ing anti-sub­sidy (coun­ter­vail­ing) duties on E.U. olive oil and a wor­ry­ing specter was that of a sim­i­lar attempt by the United States.

E.U. scheme did pro­vide a sub­sidy

According to the 72-page pub­lic ver­sion of the Lima-based tribunal’s deci­sion, the E.U. had sub­mit­ted that its Single Payment Scheme — under which farm­ers can seek income sup­port — did not con­sti­tute an action­able” sub­sidy.

Put briefly, World Trade Organization (W.T.O.) mem­bers can apply anti-sub­sidy mea­sures only to sub­si­dies deemed action­able. These must be spe­cific in nature and shown to cause injury to the country’s domes­tic indus­try.

The tri­bunal found that the E.U. scheme was indeed spe­cific, and dis­torted trade. In its dis­cus­sion of this it men­tioned that even Spanish olive oil giant Deoleo had rec­og­nized the scheme’s spe­cific nature in its cal­cu­la­tions that the pay­ments, although made on a per hectare basis, aver­aged out to about 0.5€/kg a year for olive oil from small plan­ta­tions (though in some cases reach­ing 0.8€/kg), and about 0.15€/kg for big, high pro­duc­tion farms.

Effect of swings in yields not fully fac­tored in

But the tri­bunal found there had not been proof of injury to the olive oil sec­tor in Peru. In fact, in 2010, the most recent indi­ca­tors had shown accept­able prof­itabil­ity lev­els, it said.

Also, in the orig­i­nal rul­ing allow­ing the anti-sub­sidy duties, the assess­ment of eco­nomic indi­ca­tors had not given due weight to the effect of an unre­lated phe­nom­e­non — the alter­na­tion between high and low yield har­vests known in Spanish as vecería. This occurred in Peru in 2008, when 114,360 tons of olives were har­vested, more than dou­ble that of 2007, and then crashed to just 7,176 tons in 2009.

It has not been pos­si­ble to demon­strate the exis­tence of threat of injury or causal link, there­fore the deci­sion of the first instance must be over­turned, with the result that the coun­ter­vail­ing duties cease to apply,” the tri­bunal said.

E.U. says scheme okay under W.T.O. rules

European Commissioner for Agriculture Dacian Cioloş wel­comed the out­come, say­ing he hoped Peru would act quickly to abol­ish the duties, and not­ing that an E.U. free trade agree­ment with Peru and Colombia which came into force on March 1 was designed to strengthen trade rela­tions between them.

Meanwhile, E.U. media back­ground­ing on the case — which used the term allegedly sub­si­dized” imports of olive oil — said the tri­bunal had made a valu­able effort to under­stand the E.U. sup­port to oper­a­tor orga­ni­za­tions in the olive sec­tor” but there were some mis­un­der­stand­ings in the rea­son­ing for the final res­o­lu­tion. The EU con­sid­ers this sup­port as fully con­sis­tent with W.T.O. rules,” it said.

The need to show injury to local sec­tor

Peter Koenig, of Washington DC law firm Squire Sanders, said the case had no direct bear­ing on any action being brought in other coun­tries. The Peru deci­sion, though, does high­light the WTO require­ment that, before coun­ter­vail­ing duties may be imposed against sub­si­dized imports, it must also be shown that the sub­si­dized imports injure or threaten to injure a domes­tic indus­try,” he said.


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