Dairy shipments from the European Union should be faced with retaliatory tariffs in response to the $11 billion in damage EU Airbus subsidies caused the U.S., according to testimony from National Milk Producers Federation (NMPF) president and chief executive officer Jim Mulhern before a U.S. Trade Representative panel on May 16. However, on the same panel, the president of the Specialty Foods Assn. (SFA) objected to the proposal. 

The World Trade Organization recently found that Europe’s large civil aircraft subsidies went against international trade rules and permitted the U.S. to levy duties on EU products until Europe comes into compliance.

“We have a unique opportunity to make a big dent in the dairy market access gap we face with Europe. Including EU cheeses, yogurt and butter on this list, as USTR has proposed, is entirely warranted, and we would encourage you to add additional EU dairy-related tariff lines,” Mulhern said, explaining that doing so “would bring increased attention to the gross inequities that currently define our dairy trading relationship.”

The U.S. is currently running a $1.6 billion dairy trade deficit with Europe. A complex web of EU tariffs and non-tariff obstacles are to blame, Mulhern said.

“Simply put, we are largely being blocked from the EU market despite being a trusted and proven dairy supplier to the rest of the world,” he said, singling out Europe’s use of geographic indication requirements that target common products carrying geographic names like parmesan, feta and muenster cheeses. Europe blocks sales of these everyday products from the U.S. and is aggressively pressuring other countries to do the same.

Related:Dairy industry blasts Europe’s GI policies

“It is essential that America deliver a clear and powerful message across the pond,” Mulhern said. “Subsidies and barriers that handicap U.S. businesses in the global marketplace will not be tolerated, and the days of trade deficits induced by unfair trade practices are coming to an end.”

SFA president Phil Kafarakis testified at the hearing that the tariffs would add 100% ad valorem import duties on such specialty products as cheese, olive oil and jam.

Kafarakis, speaking on behalf of the 3,800 small businesses represented by SFA, made the points that the proposed tariffs will directly affect small and medium-sized enterprises that drive the $140 billion-plus specialty food industry. Many of the processed foods being singled out by USTR are specialty foods such as cheeses — the highest-volume product in specialty foods, at $4.2 billion in annual sales, SFA said.

Related:EU’s common food name policy will cost U.S. dairy billions

Specialty food producers and retailers, which represent 15% of total retail food sales and are growing at seven times the rate of mass-market foods, offer both domestic and international products, based on their customers’ preferences.