U.S. and Spanish Officials Discuss Future of Tariffs, Trade

Summary

United States and Spain offi­cials dis­cussed strength­en­ing their trad­ing rela­tion­ship, includ­ing resolv­ing dis­putes over tar­iffs on olive oils and table olives. The recent sus­pen­sion of tar­iffs between the U.S. and E.U. over air­craft sub­si­dies has pro­vided a tem­po­rary reprieve for Spanish olive exporters, but long-term solu­tions are still needed for the dig­i­tal tax and other trade issues.

Officials from the United States and Spain spoke for the first time this week to dis­cuss the future trad­ing rela­tion­ship between the two coun­tries.

Recently-con­firmed U.S. Trade Representative Katherine Tai met with Reyes Maroto, the min­is­ter of indus­try, trade and tourism, to dis­cuss devel­op­ing a ​“more pos­i­tive and pro­duc­tive” trad­ing rela­tion­ship between the two sides.

“They agreed to work to strengthen U.S.-Spanish col­lab­o­ra­tion on mutual inter­ests, includ­ing resolv­ing the Word Trade Organization large civil air­craft dis­putes,” the office of the U.S. Trade Representative said in a state­ment. ​“They also dis­cussed Spain’s dig­i­tal ser­vice tax… and the two coun­tries’ shared com­mit­ment to find­ing mutu­ally ben­e­fi­cial out­comes.”

Earlier this month, the European Union and the United States agreed to sus­pend tem­porar­ily the com­bined $11.5 bil­lion (€9.65 bil­lion) worth of tar­iffs each side had imposed on the other over ille­gal sub­si­dies pro­vided to air­craft man­u­fac­tur­ers Boeing and Airbus.

Spanish vir­gin and non-vir­gin pack­aged olive oils and some types of Spanish and French green table olives were hit with a 25-per­cent tar­iff as part of the pack­age of puni­tive mea­sures levied by the U.S.

During the 16 months in which U.S. tar­iffs were in place, Spain’s bot­tled olive oil and table olive sec­tors were severely impacted.

According to Spain’s Food Information and Control Agency, bot­tled olive oil exports to the U.S. decreased by 80 per­cent in 2020, com­pared with 2019.

The Spanish Association of Table Olive Exporters and Producers (Asemesa) also reported that the sale of green table olives to the U.S. fell by 25 per­cent.

“The esca­la­tion in the com­mer­cial con­flict is some­thing that has not ben­e­fited either party,” Maroto said. ​“A new stage opens for the devel­op­ment of a pos­i­tive col­lab­o­ra­tive agenda between two pow­ers des­tined to be allies and close col­lab­o­ra­tors in the face of cur­rent chal­lenges.”

The sus­pen­sion of the tar­iffs will last until the begin­ning of July, when the two sides will need to decide whether to extend the mora­to­rium or reim­pose the tar­iffs.

However, offi­cials from Asemesa warned that the four-month reprieve from tar­iffs would not sig­nif­i­cantly affect exporters and urged Spanish and European offi­cials to use this time to come up with a long-term solu­tion to the Boeing-Airbus con­flict.

“The cur­rent four-month tar­iff truce agreed between Washington and Brussels will only be noticed in occa­sional sales, but not in most export oper­a­tions, which are nego­ti­ated with annual con­tracts,” Asemesa said in a state­ment. ​“American buy­ers will not change providers solely for the announce­ment of the tem­po­rary sus­pen­sion of tar­iffs and the open­ing of a nego­ti­a­tion.”

While U.S. and E.U. nego­tia­tors hope to find a solu­tion to the Boeing-Airbus con­flict, dig­i­tal tax leg­is­la­tion imple­mented in January by the Spanish gov­ern­ment has cre­ated new ten­sions with the U.S.

Last week, Tai announced that she would main­tain the threat of impos­ing addi­tional tar­iffs on Spain in retal­i­a­tion for the dig­i­tal ser­vice tax, which requires all com­pa­nies that earn more than €3 mil­lion of income in Spain and at least €750 mil­lion glob­ally to pay a three-per­cent tax.

American tech­nol­ogy com­pa­nies, includ­ing Amazon, Facebook and Google, have been hit the hard­est by the new law.

“The United States remains com­mit­ted to reach­ing an inter­na­tional con­sen­sus through the Organization for Economic Cooperation and Development process on inter­na­tional tax issues,” Tai said. ​“However, until such a con­sen­sus is reached, we will main­tain our options under the Section 301 process, includ­ing, if nec­es­sary, the impo­si­tion of tar­iffs.”

Tai and Maroto agreed to fur­ther dis­cuss the dig­i­tal tax and other issues in future meet­ings. While no date for the next set of talks was given, both sides agreed to ​“engage on a reg­u­lar basis to raise and dis­cuss key issues.”

However, one issue that was not brought up by either side dur­ing the con­ver­sa­tion was the impo­si­tion of a 35-per­cent tar­iff on exports of black olives from Spain to the U.S.

Asemesa said Spain and the E.U. should use the eas­ing of trade ten­sions and get the U.S. to retract the anti-sub­sidy and anti-dump­ing tar­iffs that were ini­tially imposed on Spanish pro­duc­ers in 2017.

Combined with the tar­iffs on green olives, the anti-dump­ing and anti-sub­sidy mea­sures have cost the Spanish table olive sec­tor an esti­mated €135 mil­lion in the past 3.5 years.

“Asemesa believes that the E.U. should take advan­tage of this cli­mate of under­stand­ing with the new American pres­i­dent to also find a solu­tion to the prob­lem of the tar­iff on black olives,” the asso­ci­a­tion said.

The U.S. and Spain are cur­rently await­ing a deci­sion from the World Trade Organization about whether the tar­iffs have a legal basis and can remain in place. A deci­sion is expected by the end of June.

Officials at Asemesa see this case as a bell­wether for other indus­tries and argue that the fail­ure of Spain and U.S. to reach a nego­ti­ated set­tle­ment could lead to future cases being brought against other European agri­cul­tural sec­tors.

“It is very impor­tant to be aware that if the WTO agrees with the United States in this case, as it did in the Airbus case, the E.U. would be forced to return and redis­trib­ute all Common Agricultural Policy aid with dif­fer­ent cri­te­ria,” Asemesa said.

• Reuters
• Spanish Ministry of Industry, Trade and Tourism