5-year truce on aircraft dispute hands temporary relief to European dairy industry

EUROPE – A recently announced five-year truce in a long-running trade dispute over subsidies for Boeing and Airbus has brought relief to Europe’s dairy industry which found itself in the crossfire between the US and the European Union.

Beginning in October 2019, many EU dairy lines have been subject to an additional tariff of 25 percent on arrival in the US.

The additional tariffs imposed on EU dairy exports reached hundreds of millions of dollars and severely impacted EU and US-based businesses alike.

Dairy producers in the EU lost business with exports of cheese to the US dropping by 10 percent in 2020 and continued to decline faster in the first quarter of 2021.

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As a result, the US lost its position as the first destination for EU cheeses and was replaced by Japan which now ranks second behind the UK.

This situation is expected to change soon as both sides have agreed to remove taxes on US$11.5 billion worth of goods, including dairy and wine, for five years.

Notably, this is not total elimination of the punitive measures but rather a five-year detente, so technically, the issue is still on the table.

Eucolait, the European Association of Dairy Trade, and the European Dairy Association (EDA) have welcomed the decision, as temporary as it may be.

Both organizations have been pushing for an end to the punitive tariffs imposed on the industry, which saw dairy producers and exporters falling victim to a dispute with nothing to do with dairy. So they became the “collateral damage” in the trade spat.

“We are incredibly happy that they made it. Together with our US friends, we have been in contact with the EU and US authorities and pushing hard on all fronts,” Alexander Anton, EDA Secretary-General said.

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“We think that, now that the air-born battle is grounded, a five-year period within the new overall EU-US framework gives more than sufficient time to really reshape and restart our US-EU trade relations,” he continues.

Eucolait, on its part, acknowledges that the five-year relaxation of tariffs falls short of a full and permanent resolution of this trade conflict.

It however notes that the gesture is a promising sign of the willingness to engage in a constructive manner, “heralding the beginning of a new chapter in the trade relations between the EU and the US.”

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