By Cristina Hodgson •
Published: 27 Jan 2020 • 8:54
THERE is good and bad news. On the negative side Spain’s olive oil industry is already feeling the impact of Trump’s tariffs. On the positive side, a US court has given the Commerce Department 90 days to argue why the duties should be maintained at current levels and could help lift some of the duties imposed by President Donald Trump’s administration.
Spain is the world’s largest olive and olive oil producing country. Its industry was hit hard when the U.S. Commerce Department imposed duties of around 35% on Spanish black olives in 2018 after concluding they were being sold too cheaply and benefited from unfair subsidies.
Since the import duties have come into play, at the end of last year, they’ve already had a profound effect on the Spanish market. The 25% levy on the product, combined with low prices and the EU’s failure to address storage issues, hit the sector hard, with exports falling by 15,000 tons from November.
In fact, the United States government’s decision to impose a 25% tariff on bottled Spanish olive oil in mid-October has pushed the industry to the point of near collapse. Olive oil exports dropped to 70,000 tons in December, down from 85,000 tons in November and 106,000 tons in October.
US tax, which is not imposed on olive oil from Spain’s European competitors such as Italy, Greece and Portugal, affects around half of the 120,000 tons of Spanish olive oil that was being exported to the United States, meaning that if the dire collapse of the industry continues, businesses will have to relocate some of the bottling plants to other countries.
With just a few weeks to go before the end of the main olive harvest, cooperatives still have olive oil left over from the previous harvest. The difficulty of storing the surplus has meant that they have had to sell this olive oil at a low price to make space for the new product.
However, there is light at the end of the tunnel, Spanish olive growers claim a first victory against U.S. duties.
Spanish olive growers have claimed an important victory in a U.S. court, which could help lift some of the duties imposed by President Donald Trump’s administration, Spain’s olive exporters’ association recently announced.
The European Union opened legal action against the duties at the World Trade Organization a year ago and the United States Court of International Trade said in a ruling, issued just last week, that some of the Commerce Department’s interpretations of the U.S. Tariff Act were arbitrary, as cited by the Spanish association Asemesa (Association of Olive Exporters)
According to the court, subsidies on Spanish black olives were not specific and that the level of production of raw olives was dependent on weather rather than the demand from the food industry, contrary to the reasons the United States had cited when deeming the subsidies unfair.
The Commerce Department has been given 90 days by the court to argue why the duties should be maintained at current levels.
“The ruling is a very important endorsement of the EU’s legal action at the WTO,” said Asemesa, adding that duties could be lowered to 20% from 35% as a result of the U.S. court decision.
A ruling which has been welcomed by the Spanish government and seen as a first step towards finding a solution.
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