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Ketchup, hostage to the US-EU trade dispute?

16/11/2020 - François-Xavier Branthôme
EU imposes retaliatory tariffs on US over Boeing-Airbus spat

The European Union said on 9 November that it would begin imposing sweeping tariffs on around USD 4 billion worth of American aircraft, food, drinks and other products beginning 10 November, an action cleared by the World Trade Organization (WTO) last month after it said Europe could retaliate against the United States for years of illegal subsidies given to Boeing. 

The decision, which stems from a 16-year-old dispute before the global trade body, comes after the Trump administration last year decided to impose tariffs on as much as USD 7.5 billion in European exports annually as retaliation for what the W.T.O. ruled were illegal subsidies given to the European airplane maker Airbus, Boeing’s main rival. 

European trade ministers agreed on the move a few weeks after international arbitrators gave the EU the green light for such punitive action. The countermeasures have been agreed by EU Member States since the U.S. has not yet provided the basis for a negotiated settlement, which would include an immediate removal of U.S. tariffs on EU exports in the Airbus WTO case. The World Trade Organization (WTO) formally authorized the EU on 26 October to take such countermeasures against illegal U.S. subsidies to aircraft maker Boeing.

European officials, however, say they are hoping for a settlement between the two countries that would end to the tit-for-tat tariffs once and for all, perhaps even before President Trump leaves office on Jan. 20 to make way for President-elect Joseph R. Biden Jr., according to a European Union official with knowledge of the cases who spoke on the condition of anonymity in order to discuss private negotiations.

The European tariffs include a 15 percent tax on large civilian aircraft and 25 percent on products including chocolate, frozen orange juice, tomato ketchup, rum and vodka, video game consoles and exercise equipment. Last year, the United States imposed tariffs on European planes, wine, cheese and other items.

It remains to be seen if the European tariffs will encourage the United States to negotiate — or if they further inflame a trans-Atlantic trade spat where the Trump administration has vowed not to bend. Last month, Mr. Trump threatened retaliation if the European Union went ahead with its levies.

Some complementary data:
Relatively important between 2000 and 2010, EU purchases of US tomato sauces and ketchup have fallen sharply over the last ten commercial years: in 2019/2020, US exports of sauces and ketchup to EU countries represented only around 4,000 mT of finished products. On average over the past three years, the European market has not represented more than 1.7% of the sector's US foreign sales.

At the same time, sales of Dutch sauces and ketchup, the main global competitors of US products in this sector, have grown almost steadily: by way of comparison, European purchases (EU28) of Dutch ketchup have raised last year to over 206,000 mT.


Further details in the attached document:
Boeing WTO case





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