US levies for Dutch agri products?

Not only goods from Mexico or China have to deal with considerable import duties in the US, the same fate can also affect many agricultural products from the European Union and the Netherlands.

It could just be that Dutch agricultural companies that export pigs, meat, tomatoes or onions to the United States will soon receive a nasty surprise. The US is considering levying hefty import duties - think of 100 percent tariffs - on those and more products from the EU, the site reports. BusinessInsider.

The EU does not allow imports of beef and beef products containing the hormones estradiol 17-b, testosterone, progesterone, zeranol, trenbolone acetate (TBA) and melengestrol acetate (MGA). The practical effect of that ban is that the EU market is off limits for US beef products. The US complained about this to the World Trade Organization (WTO) in the second half of the 1998s. The WHO subsequently ruled in 116,8 that the EU ban violated WHO rules. The damage to the US amounted to USD 90 million per year, according to the WHO and the US was allowed to levy import duties on products from the EU for the same amount. That happened and the consequences were not tender. Exports of the affected products from the EU to the US fell by about XNUMX percent in a few years.

In early 2009, the US eased those tariffs to kick-start talks about a solution to this beef trade war with the EU. In essence, the additional levies for many EU products were abolished. This approach seemed to bear fruit fairly quickly, because in May of that year the US and the EU signed a Memorandum of Understanding. Under that agreement, the EU would gradually open its market to US beef products without the aforementioned hormones. In return, the US would reduce or dismantle even more tariffs on EU products. As of May 2011, Washington abolished all additional duties for products from the EU.

Although the EU further opened the door to its market for US beef products in 2012, fully in line with the agreements, according to the US beef industry, Brussels has not taken sufficient other measures to compensate those companies for the economic damage caused by the ban on sales of beef products treated with the hormones banned in the EU. What is particularly troubling to the Americans is that the annual quota for imports of hormone-free beef products into the EU (45.000 tons) is, according to the Americans, largely consumed by beef exporters from other countries, such as Argentina.

The American beef industry complained about this in Washington and with the changing of the guard at the White House, that complaint seems to have fallen on fertile ground. Next Wednesday, the relevant committee of the US parliament a public hearing with experts and the US representative for foreign trade. The committee will then discuss the US beef industry's request for the previously abolished to reintroduce taxes equal to 100 percent of the value for EU products. The committee also wants to consider expanding the list of products that could be subject to (additional) tariffs, but before it comes to that, it wants to first examine the effects of those tariffs on the sector and the American mapping consumer.

Among the products that could be affected should Washington withdraw the duties, are meat products (including pork), tomatoes, peppers and onions, all products for which the Netherlands is an important exporter.

Edin Mujagic

Edin Mujagic is a macro-economist and chief economist at OHV Asset Management. He focuses on global central banks, and in his blogs he mainly writes about the ECB and Fed. He has also written several books.

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