A recent trade development between the United States and the European Union that started with airplanes could have implications for the U.S. dairy industry.
WTO Airbus Case
Last May, the World Trade Organization (WTO) found that EU subsidies for Airbus airplanes adversely affect U.S. airplane manufacturers. As a result of that WTO decision and the EU’s continued use of subsidies, the U.S. Trade Representative (USTR) proposed on Monday a list of EU products, including dairy, to receive retaliatory tariffs totaling $11.2 billion. USTR estimates the harm from the EU subsidies is $11 billion in trade each year, so the countermeasures are intended to be commensurate.
The preliminary tariff list is divided into two parts. The first part would target aviation products from France, Germany, Spain and the United Kingdom, and the second part would target agricultural products and other goods from all 28 EU member states. Several dairy products, including yogurt, butter, cheese and chocolate milk drinks, are included. The products and their eight-digit tariff codes are listed here.
The next step falls to the WTO, which will assign an arbiter to review the retaliation amount proposed by the United States and issue a decision this summer. If the EU hasn’t removed the subsidies by that time, USTR will release a final list of retaliatory tariffs to impose.
In response to USTR’s action this week, EU officials announced plans to retaliate against another WTO finding from March 2019 that said the United States provides illegal subsidies to Boeing. The EU also will wait for a WTO arbiter to decide the appropriate retaliation amount for its planned action.
“These actions will further strain the trade relationship between the U.S. and the EU, making it even more difficult for our countries to negotiate a free trade agreement,” said Michael Dykes, D.V.M., IDFA president and CEO.
Dykes noted that the administration has yet to decide if the EU will face tariffs on auto imports under the Section 232 investigation that was completed earlier this year by the U.S. Department of Commerce, but a decision may come next month. IDFA will continue to keep members up to date on all trade developments that could affect dairy.
For more information, contact Beth Hughes, IDFA senior director of international trade, at firstname.lastname@example.org.