Allegrini 2018

New U.S. duties: the account is 3.1 billion euros, in the black list nothing new for Italy

Published by Ustr the list of products under observation: Italy trembles for its food production, but can still be saved (again)
AIRBUS, BOEING, Coldiretti, Confagricoltura, DUTIES, EUROPE, TRUMP, WINE, WINE & FOOD, WTO, News
$3.1 billion more duties on Europe coming soon

The U.S. Department of Commerce (USTR) has published a new black list of European products that, as of June 26, will be evaluated for the introduction of new duties, or the tightening of existing ones. An expected passage, which will have to bring another 3.1 billion dollars to Washington’s coffers in the Trump Administration’s intentions, strengthened by the WTO ruling of October 2019, when in the dispute between the U.S. and the European Union on the dispute between Boeing and Airbus, set at 7.5 billion dollars the number of new duties that Washington can impose on European products. Since then, it has been a long war of nerves, with Italy saved in many of its excellences, starting with wine, but affected, with tariffs of 25%, on other specialties, such as Parmigiano Reggiano, Grana Padano, Gorgonzola, Asiago, Fontina, Provolone but also salami, mortadella, crustaceans, citrus fruit, shellfish, juices and liqueurs such as bitters and limoncello.
The list published on 23 June does not change much, only a new annex - Annex III - appears with new products being examined by the U.S. Trade Representative, but only from four countries, France, Germany, Spain and the United Kingdom (including Scotch whiskey, Irish whiskey, brandy, vodka and gin), i.e. Airbus members who, according to a lot of American and British press, could pay the biggest bill. In the other two annexes - Annex I and Annex II - the very long list of products under observation is the same as in October, 2019, and as in the other “carousels” there will be to wait (and to tremble, even if in February the country came out unscathed): the comments of the producers’ associations, for and against the imposition of new tariffs (up to 100% of the initial value, at least potentially, editor’s note), will be collected on the website of the U.S. Trade Representative (here: https://comments.ustr.gov/s/) from June 26, and the hope is that the lobby of importers and distributors of Italian wine and agri-foodstuffs will once again assert their reasons and their weight, saving, at least for a few months, the trade towards a fundamental market for our productions.
Diplomacy, in this sense, has been at work for months, not to say years, with Brussels still waiting for the WTO to rule on the parallel dispute over US funding to Boeing, which would allow the European Union to retaliate (in a zero-sum game?) against the United States. A complex and potentially explosive situation, accompanied by the understandable apprehension of the production associations of the Belpaese, starting from Coldiretti, fearful that the new consultations could increase the duties up to 100% in value and extend them to symbolic products of Made in Italy, after the entry into force on October 18, 2019 of the additional 25% tariffs that hit for a value of half a billion euros Italian specialties such as Parmigiano Reggiano, Grana Padano, Gorgonzola, Asiago, Fontina, Provolone but also salami, mortadella, shellfish, citrus fruits, juices and liqueurs such as bitters and limoncello.
The export of Made in Italy food products to the USA in 2019 - recalls Coldiretti - was equal to 4.7 billion, but with an increase of 10% in the first four months of 2020 despite the Coronavirus emergency. Wine, with an export value of over 1.5 billion euros, is the most sold Italian agri-food product in the States, while exports of olive oil were 420 million, but pasta is also at risk with 349 million worth of exports. The United States - continues Coldiretti - is the world's leading consumer of wine and Italy is their first supplier with Americans who appreciate, among other things, Prosecco, Pinot Grigio, Lambrusco and Chianti that unlike French wines had escaped the first black list taken in October 2019. If 100% ad valorem duties were to come into force on Italian wine, a bottle of Prosecco sold today at an average retail price in the US of 10 dollars would cost 15 dollars, with a significant loss of competitiveness compared to unaffected production.
In the same way, olive oil made in Italy was also saved because - Coldiretti recalls - the proposal of duties had raised the criticism of the North American Olive Oil Association, which had launched the initiative “Do not tax our health”. Now, however, Trump, in the middle of the election campaign, seems to ignore the pressures from inside and outside the U.S., putting at risk the main market outlet for Italian food products made in Italy outside the EU, and the third in general after Germany and France. “All diplomatic energy must be used to overcome unnecessary conflicts that risk compromising the recovery of the world economy severely affected by the Coronavirus emergency,” says Coldiretti President Ettore Prandini, stressing the importance of defending a strategic sector for the EU that is paying a very high bill for trade disputes that have nothing to do with the agricultural sector. “The European Union - added Prandini - has supported the United States for the sanctions against Russia which, in retaliation, has placed a total embargo on many food products, such as cheese, which has cost Made in Italy 1.2 billion in almost six years and it is now paradoxical that Italy finds itself in the sights of its historic ally, with heavy mortgages on our exports to the U.S.. To the damage, however, is added the mockery, because our country - concludes the president of Coldiretti - finds itself punished by US duties despite the dispute between Boeing and Airbus, the trigger cause of the trade war, is essentially a Franco-German project to which Spain and Great Britain have added”.
Confagricoltura is also calling for a strong commitment from the government, in the words of President Massimiliano Giansanti: “We call for a political and diplomatic initiative from the government on the US administration to safeguard our agri-food exports. We are already paying an excessive bill for a dispute that concerns us neither as a country nor as a sector. The initiative was planned - notes Giansanti - is part of the so-called “carousel” system chosen by the United States to follow up on the ruling of the World Trade Organization that considered the public aid granted to the Airbus consortium illegal. The previous review was carried out last February - Giansanti recalls - without further penalties for our products, thanks to the effective action taken by the government. The best way to resolve a dispute that has been dragging on for more than a decade would be a negotiation between the Commission and the US authorities. So far it has been impossible to start negotiations - points out the president of Confagricoltura - For this reason, the direct initiative of our government is essential to protect Italian agri-food exports on the U.S. market that exceed 4 billion euros per year. Any additional duties on our products would have a particularly heavy effect - concludes Giansanti - They would be an additional obstacle on the road to economic recovery after the health emergency”. Confagricoltura, then, widening the look to the whole European Union, also recalls how, based on data released by the EU Commission, due to the duties already in force, there has been a contraction of 66 million euros in the Union’s agri-food exports to the U.S. market. The contraction, more than 20%, mainly concerned French and Spanish wines which, unlike Italian wines, are already subject to US customs tariffs. The Cia - Agricoltori Italiani also appealed to diplomacy to avoid a devastating economic impact, especially in this first period of post-Coronavirus recovery, on the most important products made in Italy, which risk suffering the axe of the duties imposed by the President of the United States, Donald Trump: even products such as wine, extra virgin olive oil and pasta risk heavy stinging. A risk that would leave the way clear for competitors who could attack a very attractive market share: from the Argentine Malbec to the Australian Shiraz to the Chilean Merlot. “The imposition of new customs duties would inflict damage on companies and producers and put at risk a thriving market for our companies - explains Dino Scanavino, president of the CIA - Italian farmers. We need to work at the European level to safeguard our agri-food system that is already suffering from the consequences of the pandemic”.

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