Last May, the World Trade Organization (WTO) found that European Union subsidies for Airbus airplanes adversely affect U.S. airplane manufacturers and that the United States is entitled to retaliate under WTO’s dispute-settlement system.  In response, the U.S. Trade Representative (USTR) last month proposed a list of EU products, including several dairy products, that would face retaliatory tariffs totaling up to $11.2 billion, and requested public comments on the retaliation amount.

In comments submitted last week, IDFA said the current escalation of tariffs with U.S. trading partners is causing uncertainty in the market and causing U.S. companies to lose hard-earned market share. Noting that it supports the rights of the United States to retaliate against illegal subsidies, IDFA said establishing a comprehensive trade agreement between the two countries would be the best solution for U.S. agriculture and the dairy industry.  

Remove Barriers, Correct Trade Imbalance

The EU has the potential to be a large export market for the U.S. dairy industry. IDFA urged the USTR to pursue a trade pact that would include agriculture and allow for a predictable, transparent and rules-based system.

“In 2018, the EU exported close to $1.7 billion in dairy products to the United States, including $1 billion of cheese, while U.S. dairy companies exported just $145 million in dairy products to the EU,” IDFA said. “A comprehensive trade agreement with the EU would help to correct this significant trade imbalance by removing barriers to imports of U.S. dairy products, including high tariffs, small quotas, geographical indications (GIs) and other non-tariff barriers.”

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.

Read IDFA's comments here. 

For more information, contact Beth Hughes, IDFA senior director of international trade, at bhughes@idfa.org.