American tariffs costing the Irish dairy sector €40 million a year are likely to stay in place, despite actions by the governments of France and Spain, and by plane manufacturer Airbus, bringing the EU to full compliance in a transatlantic trade dispute.
Since October 2019, the USA has applied a punitive tariff on imports of Irish butter and cheddar, among other products, after the World Trade Organisation (WTO) awarded the USA the authority to claim $7.5 billion in annual compensation, in retaliation for EU subsidies paid to Airbus.
Ireland is one of the countries most affected, with the US having selected product categories which leave Ireland ranked first for tariffs as a percentage of GDP, and per capita, and sixth in terms of absolute value of tariffs.
EU Trade Commissioner Phil Hogan has said the EU and Airbus are now in full compliance with the ruling of the WTO, and there are no grounds for continuation of additional harmful tariffs applied by the US on EU exports. He called on the US to lift the tariffs immediately.
However, a swift conclusion to the dispute is not looking likely, said Alison Graham, European Affairs Executive at ICOS, which represents the dairy co-ops.
She said the EU may well need to wait until the autumn, when the US general election and another expected WTO ruling (this time in favour of the EU) could finally bring the USA to the negotiation table.
She said the US tariffs have compounded damage to the Irish dairy industry caused by Brexit, and shipping disruption and cost increases due to the COVID-19 pandemic.
Some fear that the tariffs may be increased.
In the long-running dispute over aircraft manufacturer subsidies in the EU to Airbus and in the US to Boeing, both sides took cases to the WTO, which found both were at fault, and allowed to levy tariffs on each other’s exports.
The US commenced applying tariffs to EU goods last October. The total value of Irish exports impacted, in 2018 figures, is €366m, attracting €91.6m of additional tariffs.
Commissioner Hogan said last week: “Unjustified tariffs on European products are not acceptable and, arising from the compliance in the Airbus case, we insist that the United States lifts these unjustified tariffs immediately.”
“The EU has made specific proposals to reach a negotiated outcome to the long-running transatlantic civil aircraft disputes and remains open to work with the US to agree a fair and balanced outcome, as well as on future disciplines for subsidies in the aircraft sector.”
If the US opts to maintain its duties on $7.5 billion worth of European exports, or decides to increase tariffs, or apply them to new products, the European Union will act to exercise its own sanction rights, as soon as the level of countermeasures is established by the WTO in the Boeing case. The EU already undertook a public consultation in April 2019 on a list of US products considered for countermeasures.
Commissioner Hogan said: “In the absence of a settlement, the EU will be ready to fully avail itself of its own sanction rights. The WTO will soon issue its arbitration decision in the parallel case of the EU against the US on certain unlawful subsidies to Boeing, where the Appellate Body had found the US to be in breach of its WTO obligations.”
However, a wider agenda is suspected, of the tariff dispute being designed to give the US leverage to get agriculture on the agenda for free trade negotiations with the EU, despite agriculture not being included in a 2018 agreement between Presidents Juncker and Trump.
Meanwhile, Ireland is one of the countries most affected by the American tariffs backlash against Airbus, despite the international aerospace and defence company having no business locations in Ireland.
Its European locations are mostly in France, but it also has bases in North America (including the US), Latin America, Asia, Oceania, Africa, and the Middle East.