New trade war looms over Spanish olives

New trade war looms over Spanish olives

New trade war looms over Spanish olives

The U.S. flag still flutters next to others in front of the AgroSevilla factory, the world’s biggest exporter of black olives based in southern Spain. But the cooperative in Andalusia may soon have to take down the Stars and Stripes if a rise of more than 20 percent in duties on black table olives recently imposed by the United States, its number one client, becomes permanent.

Far from just concerning Spain, the decision could snowball into the U.S. imposing duties on other European products such as French cheese or Italian wine.

Since the winter and the sudden rise in levies, “we have lost many contracts and we have had to let people go for the first time ever,” says Gabriel Redondo, president of a grouping of 4,000 farmers who all own a small share of the factory, the world’s biggest for black olives.

Set at the heart of huge olive plantations between Seville and Granada in the south, the factory treats, cures and slices olives, which are picked green.

They are then put in jars and cans and dispatched to 72 countries where they are sold to pizzerias, sandwich shops and salad bars - all expanding markets, particularly in the United States.

AgroSevilla exports 25 percent of its annual production to the U.S.

But within the space of a few months, the clouds have gathered for the cooperative and the entire sector, which employs 8,000 people on full-time contracts and ensures the survival of 16,000 farms in Andalusia.

In 2017, two Californian companies filed a complaint against their Spanish competitors to the U.S. commerce department, accusing them of dumping, or selling their products too cheaply in the United States by profiting from EU subsidies.

The department opened a probe, as did the International Trade Commission, an independent federal agency that investigates trade-related issues.

The final decision is due on mid-July, but the United States has already slapped temporary duties of more than 20 percent this winter on Spanish olives.

The conflict comes amid fears of a wider trade war after U.S. President Donald Trump’s administration raised customs duties on steel and aluminum, even if Europe is for the moment exempt from these. For farmers in Andalusia, the move to raise levies came as a total surprise.

The sector as a whole exports 40 percent of its production to the United States for some 70 million euros ($86 million) a year.

Even before the final decision, some U.S. buyers have suspended their contracts, which are now too expensive thanks to the temporary duties.

In the factory, “we’re re-organizing everything,” says Redondo, who fears they will lose market share to Morocco or Egypt.

Out of 450 employees at the factory, 30 have already lost their jobs. If the situation drags on, this could rise to 80.