US Threatens Tariffs on EU Olive Oil Imports

A World Trade Organization decision found that the E.U. has unfairly subsidized plane manufacturer Airbus. The result could be retaliatory tariffs on numerous E.U. goods, including olive oil.

Photo courtesy of Belifl Yarom.
By Daniel Dawson
Apr. 10, 2019 15:30 UTC
Photo courtesy of Belifl Yarom.

The United States has pro­posed tar­iffs on $11 bil­lion worth of European Union imports, includ­ing olive oil, in light of a deci­sion made ear­lier this week by the World Trade Organization.

The esca­la­tion of ten­sions between the two comes after a WTO rul­ing that found E.U. sub­si­dies for Airbus have an adverse impact on American pro­ducer, Boeing.

The U.S. threat to impose an import tar­iff on E.U. olive oil could prove sig­nif­i­cant for the E.U. indus­try, as the U.S. imports sig­nif­i­cant vol­umes from the bloc.- Gary Howard, senior news ana­lyst at IEG Vu

This case has been in lit­i­ga­tion for 14 years, and the time has come for action,” Robert Lighthizer, the U.S. trade rep­re­sen­ta­tive, said. The admin­is­tra­tion is prepar­ing to respond imme­di­ately when the WTO issues its find­ing on the value of U.S. coun­ter­mea­sures.”

The E.U. has crit­i­cized the U.S., say­ing $11 bil­lion was a greatly exag­ger­ated fig­ure.

See Also:E.U. Challenges U.S. Tariffs on Spanish Olives

The E.U. is con­fi­dent that the level of coun­ter­mea­sures on which the notice is based is greatly exag­ger­ated,” a source within the bloc told CNBC News. The amount of WTO autho­rized retal­i­a­tion can only be deter­mined by the WTO-appointed arbi­tra­tor.”

However, olive oil pro­duc­ers could be among the hard­est hit, as more than one-third of olive oil exports are des­tined the the U.S.

The level of tar­iffs that the U.S. could impose on E.U. goods is still in arbi­tra­tion and will not be deter­mined for a few months. However, European olive oil pro­duc­ers could expect tar­iffs rang­ing from $0.034 per kilo­gram to $0.176 per kilo­gram, depend­ing on the rul­ing.

The U.S. threat to impose an import tar­iff on E.U. olive oil could prove sig­nif­i­cant for the E.U. indus­try, as the U.S. imports sig­nif­i­cant vol­umes from the bloc,” Gary Howard, a senior news ana­lyst for agribusi­ness intel­li­gence firm IEG Vu, said.

According to Eurostat, 35 per­cent of E.U. olive oil exports were des­tined for American ports dur­ing the first fis­cal quar­ter of 2019, with an esti­mated value of $339 mil­lion.

Spain led the way, export­ing 35,323 tons. This was fol­lowed closely by Italy with 30,898 tons. Portugal and Greece exported 1,410 tons and 3,506 tons, respec­tively.

During the 2017/18 har­vest sea­son, E.U. coun­tries exported 194,570 tons of olive oil to the U.S., with an esti­mated value of roughly $1 bil­lion.

Italian pro­duc­ers will likely be the hard­est hit, accord­ing to Ettore Prandini, pres­i­dent of Coldiretti. Nearly half of all Italian olive oil that was exported in the first fis­cal quar­ter of 2019 wound up in the U.S. Last year, Italy exported $436 mil­lion worth of the prod­uct state­side.

It is a ques­tion of avoid­ing a clash of unprece­dented and wor­ry­ing sce­nar­ios that risks caus­ing a dan­ger­ous avalanche effect on the econ­omy, and on rela­tions between allied coun­tries,” Prandini said of the pro­posed tar­iffs.

Spanish and Greek pro­duc­ers will also be con­cerned about them as roughly one-third and one-half of their olive oil exports head to the United States, respec­tively.

Portugal and other E.U. pro­duc­ers will have less to fear as the bulk of their olive oil is exported else­where in the world, most notably Brazil and the Middle East.


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