The United States did not comply with international trade rules when it imposed rates of between 30% and 44% on imports on Spanish black olives, as the World Trade Organization (WTO) ruled this Friday. The European Union had appealed the US decision to the international body, which has finally agreed with the essential arguments for which it filed the lawsuit, although it has not done so in all of them. The decision was made in Brussels because, although the case does not concern a large volume of trade, it did contain the seeds of what could be a gigantic problem for the EU, since it could call into question nothing less than the aid of the common agricultural policy (CAP).
The final conclusion of the WTO panel that has analyzed the case is to ask the United States to adapt its decision to international trade rules and even refuses to enter into the merits “of all the allegations made by the European Union against the challenged measures ”by“ finding that [Washington] had acted in several cases in a manner inconsistent with the obligations [legales]”. The forcefulness of these phrases does not mean that the case that affects so much Andalusian farmers and producers of black table olives will end here.
Now several options open. One is for Washington to appeal the decision, which could hamper the process, since the WTO arbitration bodies are blocked precisely because the United States blocks the appointment of new arbitrators and has led that court to collapse. However, in this case, the EU could impose sanctions in response. Another way out would be that the Biden Administration communicates to the WTO – it has a 30-day deadline – its intention to comply with what the report calls for, something that can be complicated in some respects, because they require the approval of Congress. In this second way, if the EU does not comply with the US decision, the door opens to another litigation that could extend the case for several more years. Faced with this perspective, a senior official from the Spanish Ministry of Commerce explained to EL PAÍS that he was holding talks with Washington and hoped that the solution would come through negotiation with the WTO ruling on the table.
The definitive imposition of tariffs on black olives in August 2018 caused a significant drop in Spanish exports of this product, although a few months earlier there were preliminary sanctions. Before the measure, sales in the United States were worth € 67 million. In 2019, the first full year with the rates in force and without the pandemic affecting trade, exports remained at 26 million, 61% less, according to data from the European Commission.
The Administration of Donald Trump argued to impose the tariffs that Spanish producers received subsidies and that that money had been transferred directly to the companies that exported. The European Union appealed to the Geneva-based body in January 2019, claiming that the EU no longer provides production aid after having reformed the CAP and that, in addition, the assumption that the aid would have gone to companies was “erroneous ”. The WTO has agreed with Brussels in the first point, as can be read in the opinion of the panel, when it affirms that the Department of Commerce “did not examine and duly took into account the rules” that govern CAP payments and that “It was based on erroneous factual findings.”
The report released this Friday also points out that a point in the United States’ tariff law – a 1930 rule – is incompatible with the GATT agreements (the 1994 General Agreement on Tariffs and Trade). This would require a legislative change in the Washington Congress, something that, given the current climate of polarization in North American politics, seems complicated, and more so in international trade matters.
Although the WTO ruling agrees with Brussels “on the main point”, as the Commission states in its statement, the ruling does not fully satisfy the EU’s allegations, especially in matters related to regulation. antidumping or against unfair competition.
As soon as the decision was known, the Spanish Government has demanded that the Joe Biden Administration eliminate the tariffs imposed by the Commerce Department in 2018, with Donald Trump in power. “We have always defended that the anti-subsidy measures for Spanish black olives are totally unjustified and this has been ratified by the WTO itself”, stressed the Minister of Commerce, Reyes Maroto, who has described the decision as “a great step for a definitive solution ”and has demanded that the United States eliminate the tariffs.
“The Commission’s efforts to vigorously defend the interests and rights of EU producers, in this case Spanish black olive producers, are giving results,” said the Vice-President of the Commission and Head of Trade, Valdis Dombrovskis , after knowing the failure. “The WTO has confirmed our claims that anti-subsidy duties are unjustified and violate WTO rules. These duties seriously affected Spanish olive producers, as they caused a drastic drop in their exports to the United States. Now we hope that the United States will adopt the appropriate measures to implement the WTO ruling, so that exports of black olives from Spain to that country can resume under normal conditions ”, he added.
This Friday’s decision adds to another victory achieved by Spanish producers in January 2020. Then, the Federal Court of International Trade of the United States has already ruled, following a lawsuit from the Association of Exporters and Industrialists of Table Olives (Asemesa ), against protectionist retaliation from Washington.