US threatens EU with pork tariffs

US threatens EU with pork tariffs
Jul 02, 2019

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Products could have 100% tax

 

By Jonathan Martin
Staff Writer
Farms.com

 

The Office of the United States Trade Representative (USTR) is threatening tariffs on US$4-billion worth of E.U. goods – including pork – over E.U. member states’ aircraft subsidies.

The U.S. announced a plan to put around US$11-billion worth of tariffs in place in April, so the USTR is referring to the latest list, announced Monday, as “supplemental.”

Pork and pork products could be charged up to 100 percent tax, the official docket reads.

After hearing from “over 40 individuals” and reading “over 600 written submissions,” the USTR decided to expand the list of products it would tax, which is how pork fell onto the list.

“The U.S. and the E.U. have been going at this trade dispute for some time,” said Maurizio Agostino, chief commodity strategist with Farms.com Risk Management. “The key concern in a situation like this is that the E.U. could respond in-kind and impose tariffs on U.S. pork products.”

The E.U. is a “relatively small” market for U.S. pork, Joe Schuele, vice-president of the U.S. Meat Export Federation (USMEF), told Farms.com. It imported around US$6-million worth of pork last year or under 1,400 metric tons (mt).

Imports are up 51 percent in 2019, though. As of April, the E.U. had brought in US$2.76-million worth of pork goods.

“Every market is big to somebody,” Schuele said. “For the producers who do export to the E.U., it’s not small.”

It’s unlikely that the E.U. would choose to retaliate against U.S. pork producers, Schuele speculated. It’s more likely that, if the E.U. were to impose retaliatory tariffs, it would place them on a larger market like soybeans or beer.

“Overall, E.U. imports of pork are minimal at less than 30,000 mt and are mostly from Switzerland,” Erin Borror, USMEF’s economist, told Farms.com. “The E.U. is the largest pork exporting block in the world, with exports of 3.5 million mt last year.”

The U.S. imported around US$700-million worth of pork from the E.U. in 2018. If the E.U. imposes the threatened tariffs, it could hit around 69 percent of the goods.

“There is great uncertainty right now about U.S.-E.U. relations, from supposed E.U.-U.S. trade negotiations to the aircraft disputes, to the looming Section 232 auto tariffs, to Brexit,” Borror said. “There are a lot of moving parts. The U.S. competes against EU pork in the U.S. domestic market and in virtually all of our export markets. Further trade disruptions through more retaliatory tariffs could indeed impact the market and add additional uncertainty.”

The U.S. and E.U. began disputes over the nations’ respective commercial airline industries in 2004. Each says the other is giving too much money to private companies, a practice that is tightly regulated by the World Trade Organization (WTO) to avoid affecting international prices.

The WTO ruled that the E.U. gave Airbus illegal funding for several of its aircraft models last May, but has not yet decided what level of tariffs the U.S. can legally impose in retaliation.

In preparation for the decision, the U.S. administration is preparing lists of European products on which to impose taxes. The E.U. is reportedly making similar lists, which it plans to impose in retaliation.

The two trade superpowers have been battling since the U.S. began imposing levies on steel and aluminum products last year, to which the E.U. responded by imposing US$3.3 billion in tariffs on American goods.

American citizens can apply to appear at the matter’s public hearings until July 24 and can submit written comments until Aug. 5.

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