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EU resolution prevents tariffs on US ag exports

Courtesy of Airbus Airbus trade dispute WTO resolved
TRADE TAKING OFF: US, EU set aside differences over civil aircraft like this Airbus A320, which had led to tariffs and import restrictions on U.S. ag products.
Further steps needed to ensure food and ag trade is not strained in months ahead.

The United States and the European Union announced a cooperative framework to address large civil aircraft disputes. Within the agreement, the two countries agreed to move away from past confrontation in pursuit of a cooperative future by suspending the tariffs related to this dispute for five years, including those on agricultural products.  

U.S. Trade Representative Ambassador Katherine Tai says, “We are strongest when we work with our friends and allies, and the partnership with European Commission Executive Vice President Valdis Dombrovskis is a demonstration of that principle in action.”

In May 2018, the World Trade Organization found that EU subsidies for Airbus airplanes had adversely affected U.S. airplane manufacturers and that the United States was entitled to retaliate under WTO’s dispute-settlement system. The United States has had $11 billion of retaliatory tariffs in place on a wide range of European products, including dairy, since October 2019.

In October 2020, the WTO granted the EU permission to impose tariffs on $4 billion of U.S. goods over subsidies for Boeing. The list of U.S. products targeted by the European Commission includes a wide range of agricultural and non-agricultural products, such as concentrated milk proteins, cheeses, fruits, juices, spirits and more. The retaliation was effective November 10, 2020.  

“This deal not only resolves a long running dispute, but also benefits American farmers, ranchers and other food and agriculture industry stakeholders who were harmed by the retaliatory tariffs from this dispute, at a time in which they are working hard to recover and rebuild from the COVID-19 pandemic,” says House Agriculture Committee Chairman David Scott. “This announcement is welcome and will certainly set the stage for important future bilateral agreements between the U.S. and our European allies.”

Under the dispute, the EU placed retaliatory tariffs on non-durum U.S. wheat, which effectively blocked average annual imports of more than 538,000 metric tons of mainly U.S. hard red spring and some hard red winter wheat, according to a joint release from the U.S. Wheat Associates and National Association of Wheat Growers. Three months ago, the United States and the EU agreed to temporarily suspend all retaliatory tariffs and imports resumed almost immediately. Suspending the retaliatory tariffs for five years, pending how negotiations on aircraft subsidies go, is welcome news for wheat farm families in the Northern and Central Plains, the wheat organizations add.

A strong trade relationship with the EU is critical to U.S. soy growers, says the American Soybean Association. The EU imports about 14 million tons of soybeans per year as a source of quality protein to feed its animals, including chicken, pigs, and cattle, as well as for milk production. The U.S. remains one of Europe’s top soybean suppliers.

Additional action needed

The U.S. Dairy Export Council and National Milk Producers Federation welcomed the breakthrough while also urging further steps be taken by the EU to ensure food and agricultural trade is not upended in the months to come.  

“The bilateral commitment announced at the U.S.-EU Leaders Summit to resolve the aircraft disputes can help to normalize trade in sectors that have been harmed by retaliatory tariffs, but more work remains to get U.S.-EU trade relations on the right path,” says Krysta Harden, USDEC President and CEO. “The U.S. needs a holistic approach to Europe’s continued attempts to disrupt international trade so that our exporters have a dependable and more reasonable playing field on which to compete.”

"U.S. exporters continually have to chase new mandates by the European Union to retain our current access, even when there are no safety concerns with American dairy products," adds Jim Mulhern, NMPF President and CEO. "Too often dairy trade with the EU is a one-way street. The EU’s frequent approach to import requirements is to mandate prescriptive procedures that U.S. dairy exporters need to make time-consuming changes in order to conform just to retain access to that market for our safe products. The products we export today are entirely safe; new EU mandates that would seek to force the U.S. to change our regulatory system match theirs would do nothing to enhance that.”

NMPF and USDEC noted that the U.S. has the safest food supply in the world and was the first dairy industry globally to achieve international certification for its animal care program. EU efforts to impose their own process-focused regulations on their trading partners run counter to the EU’s international commitments and appear designed simply to layer added cost and complications upon imported products to discourage trade.

From geographical indications to overly prescriptive health certificates, the EU’s approach to managing trade has been to hamper competition rather than to let it flourish, the groups say. “To continue to move transatlantic trade relations forward, the EU’s underlying approach to agricultural trade must change,” the groups note. 

Members of Congress are also calling for the EU to take steps to help advance Transatlantic trade relations by addressing looming new EU import requirements that threaten to upend trade in the coming months.

Reps. Ron Kind, D-Wisc., Jackie Walorski, R-Ind., Jim Costa, D-Calif., and John Katko, R-N.Y., wrote to the EU’s Ambassador to the U.S. Stavros Lambrinidis, calling on the EU to delay implementation of new and excessive dairy certification requirements until U.S. and EU negotiators can reach a mutually agreed solution.  

“This trade announcement was a step in the right direction, illustrating the Biden Administration's commitment to working with our European allies to engage in meaningful cooperation. While there is more work to do to address persistent agricultural trade barriers, I am pleased to see that U.S. farmers and ranchers will not be burdened from retaliatory tariffs, as a result of this deal,” says Costa.

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