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.

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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.

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“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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