Ag News

Ag groups seek USTR help removing EU trade tariffs

 

On Nov. 18, America’s leading agriculture commodity groups and trade associations, including the American Farm Bureau Federation (AFBF), sent a letter to U.S. Trade Representative Robert Lighthizer asking that he and the Trump administration work to “deepen trade discussions” in order to bring about WTO compliance and removal of European Union (EU) retaliatory tariffs targeting U.S. food and ag exports. On Nov. 9 the EU imposed tariffs on American food and agricultural exports, including certain cheeses, agricultural equipment, distilled spirits, potatoes, nuts, fruits, juices, chocolate and ketchup.

According to AFBF, the European Union announced tariffs of $3.99 billion on U.S. aircraft, as well as a range of agricultural and industrial goods. This is the latest move in a long line of moves related to a dispute between the U.S. and the EU over the subsidizing of aircraft production. As is frequently the case, U.S. food and agriculture are being dragged into a dispute that they had nothing to do with. As the “tip of the spear” in trade disputes, U.S. agricultural producers’ goods are often first on the list in retaliatory tariffs, regardless of the type of goods and services directly related to the dispute.

The list of U.S. goods subject to EU tariffs has two different tiers: the first tier is limited to certain types of civilian aircraft at a rate of 15% and the second tier applies to a range of food, agricultural and industrial goods at a rate of 25%.

Food and agricultural goods make up 63% of the EU’s overall tariff lines. Unfortunately for agricultural producers, the targeting of farm and ranch goods for tariffs has become a somewhat normal occurrence. However, the total number of tariff lines can be quite misleading as many of them are goods the EU doesn’t import from the U.S.

The list is skewed toward processed food and agricultural goods rather than bulk agricultural commodities. When looking at the most recent EU import data, the targeted goods in food and 

agriculture amounted to nearly $1.4 billion in 2019.

There are several key products that fare worse than most and make up a bulk of the total amount of the goods (by value) that are selected for retaliation. The most impacted group comprises alcohol, tobacco and cotton. The EU targeted U.S. liquor and wine producers heavily, and it shows in this list. The fact that the next largest category is oilseeds, oils and fats shows that this list takes aim at ingredients used in food manufacturing more so than raw agricultural commodities.

AFBF’s Market Intel report on the EU tariffs can be viewed at https://gfb.ag/EUtariffs.  The ag groups’ letter can be accessed at https://gfb.ag/aggpstariffletter1120