EU dairy products hit by fallout from WTO aviation subsidies case

By Jim Cornall contact

- Last updated on GMT

Most dairy products from the EU will be hit by new US tariffs following the WTO decision.
Most dairy products from the EU will be hit by new US tariffs following the WTO decision.

Related tags: Cheese, Yogurt, Butter, Eu

The US has won a $7.5bn arbitration case at the World Trade Organization (WTO) over European Union subsidies of Airbus.

While the US said the decision shows American aerospace companies lost hundreds of billions of dollars in revenue over the nearly 15 years of litigation, other sectors in the EU will be hit by a raft of 25% import duties, including dairy.

The US has requested that the WTO schedule a meeting on October 14 to approve a US request for authorization to take countermeasures against the EU.  Pursuant to WTO rules, the WTO will provide this authorization automatically at that meeting, and the EU is not allowed to retaliate against WTO-authorized countermeasures.

The tariffs will be applied to a range of imports from EU Member States, with the bulk of the tariffs being applied to imports from France, Germany, Spain, and the UK.  The US can increase the tariffs at any time, or change the products affected.

The full list​ includes all the details of the affected products, which covers much of the dairy industry.

Tariff details

Whey protein concentrates from Spain, Germany and the UK are subject to a 25% tariff, as well as fresh cheese and substitutes for cheese, Edam and Gouda, and cheeses from sheeps’ milk suitable for grating.

All EU countries have the same 25% tariff on cheese exports, including Swiss, Emmentaler, Pecorino, processed cheese, Cheddar, blue-veined cheese, Gruyere, Romano, Reggiano, Parmesan, Provolone, and Provoletti, sbrinz, goya, Colby and Stilton.

Yogurt is also affected, including in dry form, whether or not flavored or containing add fruit or cocoa.

Butter, and butter substitute spreads, fats and oils derived from milk, processed cheese (including mixtures), fermented milk and curdled milk, cream and kefir also are hit by the 25% tariffs.

According to EU export figures, the US is the main importer of EU butter and cheese. In 2019 from January to July, the EU has exported 21,984 tons of butter, which is 23.8% of all exports. Cheese exports to the US represent 15.4% of total exports, at 76,473 tons.

Overall, however, EU cheese export to the US makes up less than 2.3% of US domestic cheese production.

NMPF delight at news

In spite of the spat being over aircraft, the US organization the National Milk Producers Federation (NMPF), welcomed the news.

“NMPF strongly endorses the US Trade Representative’s new list of European dairy exports that will now face higher tariffs, including cheeses, yogurt and butter,”​ the organization said in a statement.

“The US is running a $1.6bn dairy trade deficit with Europe because of unfair EU trade practices that block our access to their market while they enjoy broad access to ours.

“Trade authorities should also address one particularly egregious example of EU trade practices: the EU’s abusing the use of geographical indications to limit competition from cheese exporters in the U.S. that use common food names. Rather than compete head-to-head with high-quality American-made foods by allowing the use of common food names to coexist alongside GIs relating to those products, Europe instead blocks sales of these everyday food products from the US and aggressively pressures other countries to do the same.

“The retaliatory tariffs announced today are a clarion call for fair trade and an indication that trade must be a two-way trade. What better way to reduce the US trade deficit with Europe than by selling them award-winning US cheeses?”

EDA says battle should be on aircraft, not cheese

The European Dairy Association (EDA), however, was quick to point out the disconnect between the aviation case and dairy, stating that, “We are in the dairy business and hence less acquainted with the Airbus VS. Boeing case, but for this airplane state aid battle, a solution must be found within the aircraft sector. For all we see, WTO pointed out the illegality of US state aid for Boeing as of EU aid for Airbus – as it did before on Canadian state aid for Bombardier. So, indeed, there seems to be something going wrong in the aircraft sector.”

EDA secretary general, Alexander Anton, added, “I cannot see any reason to make basically the US cheese aficionados pay for the aircraft battle, since they would have to pay the higher prices for the dairy products from the EU member states involved in the airbus project (France, Germany, Spain and the UK).

“Agri-food products and hence the farming community is now regularly taken as hostage in trade disputes, this is a development that is inacceptable. It not only puts additional pressure on the agri-food businesses all over the world, in the US as much as in the Union, but also on food prices.”

Back in April, Anton said, “When talking about ‘retaliatory tariffs’, we underline that in considering what measures to take, the complaining party shall first seek to suspend concessions with respect to the same sector (see article 22.3(a) of the WTO DSU), which is also the essence of the word retaliation (‘talis-qualis’) – we cannot see why dairy and cheese would be part of this discussion.”

 

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