Food & Ag Policy Briefing: US-EU trade tensions rise, Wojciechowski fluffs his lines, Bayer admits glyphosate ‘low point’
Following a decision by an independent World Trade Organization (WTO) arbitrator that the United States can impose retaliatory measures worth $7.5 billion over subsidies provided by the EU to Airbus, the US Trade Representative (USTR) will hit selected European food products with a 25% import duty from October 18.
The tariffs will be applied to a range of imports from EU countries, with most of the tariffs aimed at imports from France, Germany, Spain, and the United Kingdom – the four countries responsible for the illegal subsidies to Airbus.
However, no EU member state will entirely escape the sanctions, and Italian producers of specialty cheese such as parmesan and pecorino have described as “absurd” the targeting of their products, which could see the cost of Italian Parmesan in the US market rise in price to $45 per kilogram from $40 at present.
Spirit makers also expressed concerns over the additional tariffs applied to Scotch and Northern Irish whiskey, claiming it will hurt jobs and investment in the industry.
On the other side of the Atlantic though, US dairy producers are delighted with the USTR move and again criticised what it describes as the “unfair trading practices” employed by the EU such as the system of geographical indications, which US producers claims appropriates common food names.
The EU is already planning its response to the new tariffs and has drawn up a ‘hit list’ of US export goods worth $20 billion, including many food and drink items, which it plans to apply once an WTO arbitrator determines how much it can retaliate in response to US support to Airbus rival Boeing.
Airbus and Boeing, the world’s two largest aircraft manufacturers, have waged a war of attrition over their subsidies at the WTO since 2004, in a series of cases marking the world’s largest ever corporate trade dispute which tested the international trade body’s influence.
The WTO ruled that both Airbus and its main US rival Boeing received billions in illegal payments and found that neither the EU nor the US adhered fully to its findings.
The Trump administration has now dealt the first blow in what looks likely to open up a new chapter in trade tensions between the EU and US.
Wojciechowski gives ‘weak’ performance, but Hogan and Kyriakides survive MEP grilling
In Brussels last week, the Commissioner-designates for agriculture, trade and health faced a series of grillings from MEPs before voting on their appointments to the new Commission take place later this month.
Cypriot Commissioner Stella Kyriakides faced little opposition, aside from tough questioning on her pledge to reduce pesticide usage, and a suggestion that ‘Food Safety’ should be added to her job title, while outgoing agriculture Commissioner Phil Hogan breezed through his hearing for the trade portfolio.
But it was not the same story for Janusz Wojciechowski, the Polish Commissioner-designate for Agriculture, who left MEPs frustrated by his vague responses to questions and a seeming lack of knowledge on key issues.
Despite opening with a statement that it was time for the EU to have a long term plan for agriculture that goes beyond the 5-year mandate of the Commissioner, MEPs struggled to elicit satisfactory responses about what exactly his proposals are aside from saying he would base his plans on a “special report” that provides a “true picture” of the current situation with EU farming.
This prompted the AGRI Committee to send Wojciechowski a list of follow-up questions to clarify his plans on future agricultural policy, from reforming the CAP to protecting EU farmers from international trade deals.
Sources speaking with IEG Policy intimated that optimism is low that the written responses will be enough to convince enough MEPs that he is the right man for the job, meaning a second hearing is likely.
This creates an administrative and political headache that could derail any hopes that Ursula von der Leyen, incoming European Commission President, and her team will take office on November 1.
IEG Policy understands that second hearings were planned to take place the week commencing on October 14. But if Wojciechowski doesn’t convince two-thirds of ComAGRI MEPs on his next attempt, it would be too late to get a new candidate ready for the final plenary vote to approve the new European Commission, which will take place on October 23 in Strasbourg.
The logical choice would be to try get a second hearing earlier, but sources suggest that this may not be administratively possible for the European Parliament to organise in time.
The situation will become much clearer this week, maybe as early as today (Monday). But in the meantime, Ursula von der Leyen and member states will be praying that Wojciechowski buckles down and pulls off a miraculous improvement.
Bayer confident about court cases
Finally, the President of Bayer’s Crop Science division gave an upbeat assessment of the ongoing lawsuits against the company with a number of people claiming that exposure to the glyphosate-based herbicide Roundup has given them cancer.
At Bayer’s annual conference in Leverkusen last week, Liam Condon admitted that the “tensions around glyphosate” are a low point for the business, but he is confident that the situation will ultimately be resolved sooner or later.
A total of 18,400 cases have been brought against Bayer’s legacy company Monsanto, with most in the US, and a California jury has ordered it to pay one victim $289 million, taking into account Monsanto “actively engaged in a fraudulent campaign” to downplay the scientific evidence of the potential health risks from the use of its herbicides.
A state judge later reduced the award to $78 million but Bayer has appealed the verdict because it considers there is little evidence that glyphosate can cause cancer. “All court cases go to appeal; it is something that will work out over time,” Condon stated at the conference.
He believes Bayer has “a very good case in the US”, pointing to a recent clarification by the US Environmental Protection Agency (EPA) that putting cancer warnings on glyphosate products is not allowed because of a lack of scientific consensus on this claim.
Nevertheless, past verdicts have already hit the company hard, with the first ruling in the Johnson case in August last year leading its stocks to drop by more than 40% in value, equalling a loss of around $40 billion.