Business

Spain Reacts to U.S. Tariff on Olive Oil

The announcement of the U.S. tariffs comes as protestors head to Madrid to demand action on low olive oil prices. Government officials fear Andalusia, one of Spain's poorest regions, will be hit the hardest by the tariffs.

Harvesting olives in Andalusia
Oct. 10, 2019
By Daniel Dawson
Harvesting olives in Andalusia

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As the dust set­tles on the United States Trade Rep­re­sen­ta­tive’s (USTR) deci­sion to impose retal­ia­tory tar­iffs on $7.5 bil­lion worth of imported goods from the Euro­pean Union, Span­ish olive grow­ers, oil pro­duc­ers and gov­ern­ment offi­cials are left to work out what comes next.

Last week, the USTR imposed a 25-per­cent tar­iff on imports of Span­ish vir­gin and non-vir­gin olive oil in all of its frac­tions in con­tain­ers of less than 18 kilo­grams (39.7 lbs) as part of a series of retal­ia­tory coun­ter­mea­sures against E.U. coun­tries that ille­gally sub­si­dized air­craft man­u­fac­turer Air­bus.

(The United States) can­not take the agri­cul­tural prod­ucts of Spain and Andalu­sia hostage.- Car­men Cre­spo, Andalu­si­a’s Min­is­ter of Agri­cul­ture

Cristo­bal Gal­lego, the head of olive oil for Andalusia’s Coor­di­na­tor of Agri­cul­ture and Live­stock Orga­ni­za­tions (COAG), esti­mates that these tar­iffs will directly impact 50,000 tons of Span­ish olive oil exports to the U.S., about 43 per­cent of Spain’s annual export total to the coun­try.

Gal­lego also advo­cates for a blunt” response from the E.U. to the U.S. tar­iffs but warned against any type of retal­i­a­tion that would lead to an esca­la­tion in the grow­ing trade dis­pute.

See more: Olive Oil Trade News

Luis Planas, Spain’s Min­is­ter of Agri­cul­ture, Food and Fish­eries, also called on the E.U. to work with the Span­ish gov­ern­ment in order to pro­tect the trad­ing bloc’s agri­cul­tural sec­tor from the impacts of the U.S. tar­iffs.

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We are all united in the firm­ness of the nego­ti­a­tion that the Euro­pean Union must fol­low with the United States so that the agri-food sec­tor is left out of this dis­pute and is not affected by pos­si­ble com­mer­cial sanc­tions, since it is not the sub­ject of the dis­cus­sion,” he said.

Already, olive oil prices in Spain have fallen as a result of the impend­ing tar­iffs. Accord­ing to the most recent data from Poolred, an orga­ni­za­tion that tracks olive oil prices, the aver­age price of extra vir­gin olive oil dropped by five per­cent, down to €2.104 ($2.310) per kilo­gram. Vir­gin olive oil prices and olive oil lam­pante prices also fell slightly.

In recent weeks, prices had remained steady and even increased a bit. Some in the Span­ish olive oil sec­tor had expressed cau­tious opti­mism that an off-year har­vest com­bined with new mea­sures from the Euro­pean Com­mis­sion regard­ing self-reg­u­la­tion would help prices recover.

Pro­voked by these low olive oil prices, thou­sands of olive farm­ers and oil pro­duc­ers are set to protest in Madrid on Octo­ber 10. Orga­niz­ers esti­mate that 13,000 pro­duc­ers will head to the Span­ish cap­i­tal demand­ing aid for those strug­gling to get by due to the low prices.

The newly imposed tar­iffs will also be high on the list of pro­tes­tors’ con­cerns. Olive oil exports from the rest of the E.U. were removed from the ini­tial list of retal­ia­tory tar­iffs, leav­ing Span­ish pro­duc­ers at a sharp com­pet­i­tive dis­ad­van­tage.

That 25 per­cent tar­iff means that after Octo­ber 18 we will lose the U.S. mar­ket; we will not be able to rival our com­peti­tors,” Rafael Pico Lapuente, the direc­tor of the Span­ish Asso­ci­a­tion of Olive Oil Export­ing, Indus­try and Com­merce (Aso­liva), told Ger­man state broad­caster DW. We also do not have the chance to sell 230,000 tons in other mar­kets out­side the U.S. For us, this loss is a cat­a­stro­phe.”

Accord­ing to data from the U.S. Depart­ment of Com­merce, Spain exported 115,000 tons of olive oil – worth about €400 mil­lion ($439 mil­lion) – to the U.S. last year, which made up slightly more than 35 per­cent of all Amer­i­can olive oil imports.

Gov­ern­ment offi­cials worry that this sig­nif­i­cant eco­nomic loss will hit Andalu­sia the hard­est. The south­ern Span­ish autonomous com­mu­nity is respon­si­ble for 80 per­cent of Spain’s olive oil pro­duc­tion and is still suf­fer­ing eco­nomic hard­ships from the 2008 finan­cial cri­sis, with unem­ploy­ment rates still as high as 23 per­cent and youth unem­ploy­ment at a stag­ger­ing 40 per­cent.

“[The United States] can­not take the agri­cul­tural prod­ucts of Spain and Andalu­sia hostage,” Car­men Cre­spo, the autonomous community’s Min­is­ter of Agri­cul­ture, Live­stock, Fish­eries and Sus­tain­able Devel­op­ment, said.

She will head to Madrid to dis­cuss an appro­pri­ate response to the tar­iffs with Planas and other gov­ern­ment offi­cials.

“[We need] a com­mon front of all admin­is­tra­tions along with the Euro­pean Union that allows us to mit­i­gate these cir­cum­stances, which have a very neg­a­tive influ­ence on the trade of our prod­ucts and make it infea­si­ble that farm­ers and pro­duc­ers get a fair price, putting their com­pet­i­tive­ness at risk,” she added.





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