Concern growing over possible US tariffs on Irish food products

Concerns are growing that Irish food products could be hit by damaging US tariffs, as Washington prepares to impose retaliatory measures on a range of European Union goods over a long-running World Trade Organisation dispute over Airbus.

Officials in the Irish Embassy in Washington and working closely with the EU delegation in the capital, amid fears that Irish products could be hit by the measures in the coming weeks.

It is understood that Taoiseach Leo Varadkar also raised the issue during his meeting with US vice-president Mike Pence earlier this month.

Meanwhile, representatives from the Irish Whiskey Association will travel to Washington this week to participate in meetings with trade officials and industry representatives.

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The dispute centres on what the US claims are unfair EU subsidies for aircraft builder Airbus.

WTO arbitrators confirmed to both parties on Friday that it had ruled in favour of the US in the trade dispute, but it is has still not been revealed publicly by how much the US will be permitted to hit back at EU exporters.

A final decision is expected in the coming weeks.

In July, the US trade representative published an expanded list of products that could be subject to tariffs when the US retaliates. That list included products such as Irish whiskey and butter – important Irish exports to the US. The US is Ireland’s primary export market for whiskey, with more than €620 million worth of product sold in the fast-growing market last year. Similarly, Kerrygold is the second most popular butter brand in the US. More than 34,000 tonnes of the Irish product was exported to the US in 2018.

An analysis by Ibec found that Irish goods would be the most exposed, on a per-capita basis, to the proposed US tariffs on EU goods, noting that €818 million worth of products would be hit.

“Given that the food and drink sector makes up two-thirds of the exports of indigenous firms there is potential here for significant knock-on impacts on the domestic economy,” the association wrote in its most recent economic outlook.

WTO ruling

EU officials and trade representative groups in Washington are working closely on the issue as producers prepare for the announcement of the final ruling by the WTO. Four countries have been deemed by the WTO to have received unfair subsidies for aircraft manufacturing – France, Britain, Spain and Germany, though the proposed US subsidies would hit products coming from across the bloc.

In a further twist, the WTO is due to rule next spring on a parallel case involving US aircraft maker Boeing. As with the Airbus case, the Geneva-based body has ruled in favour of the EU claims that Boeing has received unfair federal and state incentives. Some officials believe that the two sides will try and work out some compromise when the Boeing determination is published next year, possibly April.

Nonetheless, the damage to Irish goods in the interim could be significant. William Lavelle of the Irish Whiskey Association said the organisation was calling on the EU and US to seek a negotiated solution to the broader Airbus-Boeing subsidies dispute and to avoid tariffs on non-related categories.

“The EU and US spirits industries are united in lobbying for zero tariffs in global spirits trade and we continue to call on the EU to drop the current tariffs on US whiskey,” he said.

The forthcoming US tariffs, which would be WTO-sanctioned, are distinct from other US sanctions that have been threatened by US president Donald Trump against EU goods from cars to wine.

Mr Trump said last month that he would tax French wine over concerns about a proposed French digital tax which would hit US companies disproportionately.

Trade between the US and the EU topped almost $1.3 trillion (€1.17 trillion) last year.

The US is currently locked in a trade war with China, with both sides imposing punitive sanctions on imports. In a sign that tensions may be easing, Mr Trump said last week he would delay the latest round of sanctions until trade negotiations scheduled for early October take place. Beijing announced on Friday that it would exempt some US soybeans, pork and other agricultural products from additional tariffs.