Trump’s olive siege of farming fortress Europe

Brussels fears that fast-moving US trade case could undermine €58 billion-per-year Common Agricultural Policy.

Spanish olives, and potentially the EU’s agricultural policy as a whole, are the next potential victims of Donald Trump’s “America First” policy.

The U.S. Department of Commerce opened a probe last month to determine whether to slap duties on ripe olives from Spain, after Californian producers argued their Iberian rivals receive an unfair advantage because of the EU’s lavish farm subsidy scheme.

For Brussels, the case could set an alarming precedent. Under the sacrosanct Common Agricultural Policy, the EU pours about 40 percent of its budget into farm subsidies and it is highly protective of any trade investigation that questions the legality of those payments. Last year, Brussels pushed back hard against Australia’s moves to put tariffs on Italian tinned tomatoes.

Washington may prove a tougher adversary than Canberra. Brussels is bracing for U.S. tariffs to be imposed as early as November, as President Trump vows to slash the trade deficit with the EU, which swelled to $147 billion last year from $61 billion in 2009.

“This is a problem that not only concerns Spanish ripe olives but all agricultural sectors,” said Antonio de Mora, secretary-general of the Spanish olive producers’ association Asemesa. “It throws the legality of the entire system of EU support to different agricultural sectors into question.”

Europe’s powerful farming lobby Copa & Cogeca shares the same concern, arguing that the case could set “a dangerous precedent.”

Pledging action, EU Commissioner for Trade Cecilia Malmström wrote to European parliamentarians on August 17 to reassure them that she would “continue to intervene throughout the investigation on a technical and also political level, in order to avoid any unjustified measures.”

Meanwhile, the Coalition for Fair Trade in Ripe Olives, a U.S. lobby created by three major olive producers from California, argues that the subsidies have made Spanish ripe olives so unfairly cheap that the Californian olive business, which is more than a century old, is fighting for its life.

“The legacy and even the survival of the U.S. ripe olive industry are at stake,” said Tim Carter, CEO of Bell-Carter Foods Inc, one of the Californian olive producers.

America First vs Common Agricultural Policy

Brussels’ hopes of a quick resolution to the case were dashed earlier this month when the U.S. International Trade Commission — an independent agency advising the Department of Commerce —  found a “reasonable indication” that U.S. producers are being injured by the imports from Spain.

The Department of Commerce is now expected to issue preliminary countervailing duty determinations around September 15 and preliminary anti-dumping duties by November 29. Commerce Secretary Wilbur Ross said in July the U.S. was ready to “act swiftly to halt any unfair trade practices.”

“What we are seeing here is Trump’s ‘America First’ attacking our agriculture policy,” said Clara Aguilera García, a Spanish member of the European Parliament. “It seems Trump’s policies are encouraging U.S. producers to go down a protectionist path and try to shut out foreign competition.”

De Mora, head of the Spanish olive association, accused the Californians of only starting their protests after the Spaniards launched major promotions for their fruit this year.

Criticism of Europe’s farming subsidies is nothing new, and the CAP is often accused of unfairly hobbling competition, particularly in emerging markets. Earlier this year, former U.N. Secretary-General Kofi Annan quipped: “The European Union pays enough subsidies to fly each cow in Europe around the world first class and still have money left over.”

But the European Commission insists that the CAP is fully in line with World Trade Organization rules and does not directly subsidize exports.

“The only reason Spanish producers can produce black table olives so competitively is due to their efforts to reduce production costs, combined with investment in key issues like quality technology,” said Copa & Cogeca’s spokeswoman Amanda Cheesley.

Aguilera García criticized Malmström for handling the affair as an isolated issue concerning only the Spanish olive industry. “If we allow the U.S. to go ahead with this, then we risk other countries saying: Why don’t we also challenge the EU’s agriculture policy?”

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