The WTO(World Trade Organization) yesterday gave the green light to U.S. duties on imports of European goods, up to US$7.5 billion. By way of retaliation over the EU’s funding of the Airbus Consortium. Thus to the harm – of having contributed our taxes to the illicit financing of the Franco-German aviation giant (with smaller shares from England and Spain) – is added the mockery. Since Italy will be among the first to foot the bill for European malfeasance. It is time to look to new horizons.
US duties, the motive
In 2004, the U.S. sued the WTO over funding provided by the European Commission to the Airbus group. Deducing that they are unlawful because they are attributable to state aid not allowed under the agreement establishing the WTO (or WTO, World Trade Organization). As capable of altering the conditions of international competition in the aviation industry. In that same year, the United States in turn provided the Boeing group with public funding, which was challenged by the European Union in the WTO.
On 2.10.19, the WTO acknowledged the merits of U.S. challenges to European aid to Airbus. Declaring Washington’s application of additional duties on imports of goods from Europe legitimate. As a retaliatory measure suitable to compensate for the wrongs suffered, within the limit of US$7.5 billion (equivalent to €6.8 billion). Among other things, the WTO was lenient to Europe in the face of a formal request for US$11.2 billion in compensation. Awaiting, by the first half of 2020, a ruling on the dispute activated by the EU against the United States over aid granted to Boeing.
U.S. duties, how many and which ones
As is customary in WTO litigation, the pronouncement recognizing the right to apply retaliatory duties defines the quantum, that is, the total amount of compensation and the maximum share of duty increases (in this case, up to doubling). However, without specifying the quomodo, that is, the categories of goods invested by the additional duties, and the timeframe within which to reach the decided compensation threshold.
The Office of the U.S. Trade Representative therefore stressed the possibility for Washington ‘to raise tariffs at any time.’ Up to 100%, effective 18.10.19. And to change the list of ‘affected products‘ over time. According to the ‘Carousel‘ scheme, which at the winner’s discretion can come down on the supply chains of this or that country. Including those, already announced, of the dairy and wine sectors in Italy.
A transitional reassurance is addressed to the ‘allies’ who are meanwhile being asked to increase their contributions to NATO military expenditures. As well as following orders to isolate our historical partners-such as Russia, Iran and Syria-as well as China and Venezuela. Not to mention the pressure to conclude TTIP, with its not insignificant reflections. And thus, ‘at this time‘ additional duties on goods of ‘allies’ will be lower.
The sword of Damocles on Italian cheeses
The new duties will presumably apply to Scotch whiskies, French wines, Italian cheeses, and olives from Spain, France and Germany. As well as wool and English clothing, and a ‘10% duty’ on ‘large civilian aircraft’. All that remains is to wait for the provisional list of products on which this sword of Damocles will fall, to predict its impact on the Italian agribusiness sector. Although Mike Pompeo, now visiting Italy, referred to Italian cheeses and wines. Perhaps also to force us to stop our existing collaborations with China on 5G.
Pecorino Romano cheese produced in Sardinia is the product most at risk. Given that the U.S. accounts for more than 60 percent of total exports. And not even the posthumous fulfillment of the former interior minister’s election promise – Sardinian sheep’s milk at 1 euro per liter – could prevent the disintegration of the supply chain. (1)
The Parmigiano Reggiano, Grana Padano, and Provolone PDO supply chains in turn are at risk of experiencing a collapse in exports on their prime export destiny. With the double damage of reducing sales and losing hard-won market share over decades. To the benefit of counterfeits Made in the USA and Made in Canada, which the dastardly CETA agreement-so much wanted by Matteo Renzi and his Teresa Bellanova-has already cleared customs, admitting the evocation of the names of our PDOs (dairy and otherwise). (2)
New Horizons
Pantalone pays, twice over. First by accepting the devolution of its public contributions to Europe, in favor of the Corporation of the French and Germans, Spanish and British. Then footing the bill for illicit aid from which it derived no benefit, except to risk being hit in one of its strategic sectors. (3) Those who continue to blather on about a Europe that ‘gave us seventy years of peace‘ will have to account to the Sardinian and Ragusan shepherds, the farmers of the Po Valley. As well as food and machinery industries, and those who rely on related inducements for their livelihoods. What compensations?
Deeper reflection deserves the ‘American dream,’ which many persist in pursuing. Neglecting the negative repercussions of dependence on an overbearing master who demands exclusivity, driving us away from markets that present far greater opportunities in a short-, medium- and long-term perspective. Such as Russia and China, as well as India and Brazil.
The BRICs have only disappeared from Italian business newspapers. Where the N11, the Next Eleven, as well appear infrequently. Neglecting in particular 4 of these–Indonesia, South Korea, Mexico and Turkey–which the brilliant analyst Jim O’Neill has been calling ‘the growth markets‘ for five years already. (4) 15 countries where a ‘global middle class‘ is expected to be formed by 2030 that will be well able to appreciate Made in Italy goods. Without even claiming to install military bases with nuclear devices at our home, nor to bomb our neighbors with the endorsement of servile piddits.
Domestic demand, in turn, escapes due attention from some players in the Italian supply chain. Who appear to be ‘hardened foreigners,’ even in the public statements of their representatives, from Federalimentare to Coldiretti. It is perhaps a cultural legacy of the American dream to devote more resources to trade fairs in Cologne and New York than to garrisoning an increasingly parched land. Kind of like going to look for water on Mars instead of taking care of one’s social-environmental ecosystems. Losing sight of the essential need to build short, equitable and sustainable supply chains. Creating Value and Work – VALORO, in Vito Gulli’s crase – to strengthen the country’s economy at its roots.
#Égalité!
Dario Dongo and Giuseppe Masala
Notes
(1) Indeed, it would be worth asking the Sardinia Region what its hundreds of experts have done to diversify the product and markets, as well as revitalize the supply chain. See previous article https://www.greatitalianfoodtrade.it/consum-attori/c-è-latte-e-latte-le-ragioni-degli-allevatori-in-sardegna
(2) It is also worth mentioning how the use of the name Parmesan was expressly legitimized by Jean-Claude Juncker’s Commission, in the subsequent EU-Japan Treaty (JEFTA). See https://www.greatitalianfoodtrade .it/idee/jefta-lettera-aperta-ai-consorzi-delle-nostre-dop-e-igp
(3) The agribusiness sector, it is recalled, expresses 13 percent of Italy’s GDP and ranks us first in Europe for value added in agriculture, second for agricultural production and third for industrial production. See https://www.greatitalianfoodtrade .it/idee/al-nuovo-governo-alcune-proposte-per-il-settore-agroalimentare
(4) Jim O’Neill, in ‘the Growth Map‘ (2014), highlights the rosy outlook for BRICs and N 11, linked to population growth and productivity gains that are coupled with other factors, such as access to education, technology and stable inflation rates. See review of the valuable book at https://www.greatitalianfoodtrade.it/libri/letture/il-libro-the-growth-map
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
Giuseppe Masala, writer, writes about economics and international politics in L'Antidiplomatico and Contropiano.
