US antidumping and antisubsidy investigations on Spanish olive: a potential trade negotiation weapon of mass destruction

The real issue is much more relevant: it is the “green box” classification of the EU decoupled support which is undermined by the US investigation

The US antidumping and antisubsidy investigations on Spanish olive: a potential trade negotiation weapon of mass destruction

 

 

US Secretary of Commerce Wilbur Ross announced on July 13 that his department was opening antidumping duty (AD) and countervailing duty (CVD) investigations “to determine whether imports of ripe olives from Spain are being dumped in the United States, and whether producers in Spain are receiving alleged unfair subsidies.”

The day after the announcement, Spanish agriculture committee (COMAGRI) MEP Clara Aguilera (former Andalusian regional Minister, being Andalusia the main word producing region of table olive and olive oil), asked the following written question to the European Commission:

Trump Administration's announcement on anti-dumping measures against Spanish olives

The US olive industry has filed a complaint with the US Government Administration about imports of European olives (only black olives), particularly from Spain. The industry claims that through some CAP mechanisms, Spanish olives are being sold at a cheaper price than those grown in the US, which not only affects this particular sector, but could set a precedent for casting doubt on European exports in other sectors. Given that in the US, unlike in the EU, a measure is implemented first and then the justification for the measure is investigated, it can easily be assumed that it will not be long before import tariffs rise. This is all happening at a time when olive producers are investing money in promotional campaigns in the US.

What measures, both technical and political, will the Commission consider implementing to counter this protectionist move?

Clara Aguilera is rightly putting the issue on the table but timorous when she argues that it “could set a precedent for casting doubt on European exports in other sectors”.

The real issue is much more relevant: it is the “green box” classification of the EU decoupled support which is undermined by the US investigation. The European Commission has laid out its response to the investigation, that EU measures are compliant with World Trade Organization (WTO) rules, eligible to the Green Box which means not trade distorting and not countervailable,

The preliminary dumping and subsidy determinations are expected by November 29 and September 15, respectively.

I have the privilege, in one of my previous lifes, to have been member of the EU team able to lose 2 GATT panels known as the “soya panels”, opened at the US request. One of the things I have learned is that those panels are unpredictable.

A Court of Justice is “law and precedent based”. It analyses if the adopted measure is in conformity with it understanding of the corresponding law. It can be unfair but if it is in conformity with the legal text it should be legal.

A WTO panel is something completely different. If it act as a “Court of Justice”, which can happen, it will examine the EU subsidy scheme  and look if it is in compliance with the “Green box” wording of the Uruguay Round agreement. In this case, I can be reasonably confident that it should conclude that this is the case.

But it can also enter in the debate of what “non-trade or minimum-trade distortive measures” means. And in this case, the issue is completely unpredictable. The members of the panel are often retired trade lawyers, absolutely uncontrollable, free riders which could be willing to have their “instant of glory” and a panel like this can be significantly more than an “instant” of glory.

In this case, it could broke completely the political consensus behind the Uruguay Round agreement and push the EU not only to renegotiate the “Green Box” definition but also to request another WTO panel on the US current agricultural policy and the counter-cyclical payments, In this case, the surprisingly still alive multilateral Doha negotiations would collapse and the Trump administration reaction would be (even more than usual) unpredictable. 

This panel could be a trade negotiation weapon of mass destruction.