Spain Reacts to U.S. Tariff on Olive Oil

Summary

The United States Trade Representative has imposed retal­ia­tory tar­iffs on Spanish olive oil due to ille­gal sub­si­dies given to Airbus by E.U. coun­tries, lead­ing to con­cerns among Spanish olive grow­ers and gov­ern­ment offi­cials about the impact on the indus­try and the need for a united response from the E.U. to pro­tect the agri­cul­tural sec­tor from fur­ther sanc­tions. The newly imposed tar­iffs are esti­mated to directly affect 50,000 tons of Spanish olive oil exports to the U.S., caus­ing prices to drop and prompt­ing protests from olive farm­ers and oil pro­duc­ers in Madrid, who fear los­ing the U.S. mar­ket to com­peti­tors and antic­i­pate sig­nif­i­cant eco­nomic losses, par­tic­u­larly in Andalusia, which is respon­si­ble for 80% of Spain’s olive oil pro­duc­tion.

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.

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.

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.

“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.

• La Contra de Jaén


• DW


• La Vanguardia