Preparing for the worst...

I've spent a lot of time talking with importers and retailers of European imports and getting their reactions to the pending revised trade action in the Beef Hormones dispute. And as the senate is scheduled to vote on Ron Kirk's nomination as the U.S. Trade Representative this week, I thought the time is right to revisit what is looming around the corner for select European specialty food products.

Importers, retailers ready for tariffs

By Anna Wolfe, editor of Gourmet News

WASHINGTON—Retailers and importers are hoping for the best and planning for the worst as the March 23 effective date for new tariffs approaches.
Days before the U.S. Trade Representative’s Revised Trade Action goes into effect, the Senate is scheduled to vote on the nomination of former Dallas Mayor Ron Kirk to be U.S. Trade Representative this week.
The new list of E.U. foods slated for 100 percent duty was announced by the USTR on Jan. 15, during the final days of the Bush administration.
It is unclear what triggered the change in products. "The goal of these modifications is to reach a resolution of the dispute under which the E.U. would allow market access for U.S. beef, and the United States could end its trade action," said former U.S. Trade Representative Susan Schwab in a Jan. 15 statement. If the trade action is not repealed or delayed, it will be the first change since 1999 to the list of European Union products subject to additional duties in connection with the World Trade Organization dispute settlement rulings in the E.U.—Beef Hormones dispute.
When asked by Gourmet News why certain products were targeted with 100 percent tariffs while products, such as mustard and rusks were removed from the list, Roger Wentzel with the USTR office declined to elaborate.
Even though his company is not affected, David Hauss, national sales manager of Couturier NA, importers of French goat cheese, described the USTR’s revised rulling as "totally ridiculous.
"If they wanted to do something that would really impact France, the USTR would have picked Champagne," he said. "Roquefort is such a specialty product that’s symbolic of the country."
The same, Hauss said, goes for other products on the list—lingonberry jam from Sweden, bone-in cured pork from Spain and Italian mineral waters.
After the Roquefort with 100 percent duty worked its way to the cheese cases, sales dropped by 50 percent, said Trish Pohanka, director of purchasing for Chicago-based European Imports.
Roquefort sales did not go unnoticed by the U.S Trade Representative. "The reason Roquefort was increased to 300 percent is because it has been on the current trade list—and it was still coming in," said USTR's Wentzel. "One-hundred percent duty was not deterring trade. These are trade sanctions. The idea is to deter that trade. We’re trying to get parties to comply with WTO ruling."
Retailers and importers interviewed in February by Gourmet News—including Taylor Griffin, The Rogers Collection; Stephanie Ciano-Pace, Crystal Foods Imports; and Dave Giambalvo, The Cheeseworks—were cautiously optimistic the Obama administration would repeal or delay the action that will add 100 percent duty on European products.
Roquefort cheese, on the original 1999 list, will have its tariff increased to 300 percent from 100 percent. Retailers and importers interviewed by Gourmet News in February agree the 100 percent tariffs could double the retail prices of the targeted European imports—and push Roquefort cheese in the market of $65-$80 per pound.
Fretting over the upcoming price hikes, importers and retailer too were stockpiling product at press time. Importers interviewed by Gourmet News including European Imports, Chicago; Rogers Collection, Portland, Maine; Crystal Food Imports, Lynn, Mass.; and The Cheese Works, Alameda, Calif.—were all looking at bringing in additional inventory of some of the targeted products before the March 23 deadline.
Griffin, co-owner of The Rogers Collection, imports the Jamon Iberico bone-in hams and other Jamon Iberico products through its Fermin USA division. "People are madly trying to ship to get product in the door" before the March 23 date, he said. If the measure goes through, it will kill the market for the bone-in Iberico ham. "Forget it, we can’t sell $400 pound meat," Griffin said.
Don Harris, owner of La Tienda, an online purveyor of Iberian specialties based in Virginia Beach, Va., agrees with Griffin that the sales of Jamon Iberico will dry up if the tariff goes into effect.
"We sold 400 in the last few months," said Harris about the expensive bone-in ham. "The market is limited as to who will buy it."
Even before the news of the tariff hit, Harris was already planning to sell pre-sliced Jamon Iberico from the paleta or shoulder, which isn’t subject to the tariff. Griffin already imports a presliced Jamon Iberico product to the U.S. market.
Also preparing for the worst and hoping for the best is the Italian National Association of Meat Processors. "We don’t know if it is going to hit," said David Biltchik, chairman of Consultants International Group, Washington, which represents the Italian National Association of Meat Processors in the United States. Biltchick believes Obama’s message of change might prevail. "They (the Obama administration) don’t want to start their relationship with the European Union in a negative way."
Just in case, Biltchik has advised the Italian National Association of Meat Processors "to anticipate for the worse."
If the revised tariff schedule goes into effect, it will be the first change to the list of E.U. products subject to additional duties in the Beef Hormones dispute since 1999.
In 1998 the World Trade Organization ruled that the European Union’s ban on U.S. hormone treated beef was not based on science and was inconsistent with WTO rules. With the WTO’s authorization, in 1999 the U.S. imposed additional duties on a list of E.U. products with a total trade value of $116.8 million.
On Jan. 15, the USTR published its revised trade action on www.ustr.gov, listing 65 classes of E.U. products targeted with 100 percent duty. The duty on Roquefort, on the original list, has been increased to 300 percent from 100 percent.
Items removed from the list include mustard, preserved tomatoes and rusks. Truffles and goose liver are among the products staying on the list with 100 percent duties. -end-