THE BEGINNING OF A US-EU TRADE WAR?
The “hot autumn” for trade that we predicted in a previous post gets dangerously close, as it would seem the US got the WTO final green light to apply sanctions to EU exports, on the Airbus subsidies case.
The EU might also get the opportunity to impose its own sanctions when a final decision is reached in the WTO in the next few months on the Boeing subsidies case.
It would seem logical that the US and the EU find a compromise rather than sanctioning each other, but that hasn’t happened so far.
According to preliminary information the US might impose sanctions in between 5 to 10 bn euros. The list of targeted products is already known, and many agri-food products are on the spot. Wine, dairy (in particular cheeses), olive oil and olives, are the most significant.
With that high level of authorised sanctions the US can effectively block all EU exports of those products. The latest figures available show that for cheeses, wine and olive oil, the EU has exported yearly roughly 5.8 bn euros. It should be noted that the sanctions are accounted for in tariff value, not in trade value. The US can apply different tariffs to different products, and the calculated value of the tariffs can be as high as the authorized amount of sanctions, and thus the value of the trade actually sanctioned can be much higher.
The EU sanctions to come on the Boeing case are of little help to the sector. Although they concern a wide range of US agri-food exports, including wine and cheeses, the fact is that the EU exports more of these products to the US than what she imports.
The sector should push the European Commission to find a compromise with the US, but the fact is that you need two to tango and the Trump Administration seems to prefer confrontation first.
The autumn starts soon, and the streak of bad news could include a no-deal Brexit. Time to re-think the CAP reform and beef-up the resilience of the sector with a real crisis fund?