At first glance, a spat between two of the world’s biggest airplane manufacturers, Boeing from the USA and Airbus from the EU, may appear to be no more than a passing interest to Irish farmers.

However, that changed this week with the imposition of a ruling by the WTO, which arbitrates on international trade disputes, in favour of the US company.

This ruling means that the US can now charge tariffs on imports from the EU up to €7.5bn and the US has indicated that agriculture is one of the categories it will select for the retaliatory tariffs.

This is where the impact is likely to be felt by Irish farmers, because, while it is a small market for Irish beef and pigmeat exports, it is a huge market for Irish dairy exports.

US action

The USA has published a list of products from EU countries on which it will impose tariffs of 25% effective from 18 October. It has identified individual EU countries and product categories in each.

Irish dairy exports, in particular, have been targeted, including liqueurs but not whiskey, as has pigmeat.

Butter is one of Ireland's dairy exports to the US that will be hit with a 25% tariff.

The Irish dairy sector is most dependent on the US market at present, whereas the global pigmeat market is driven by demand from China at present because of the African swine flu outbreak reducing the Chinese pig herd.

Hogan’s problem

Resolving this dispute will be waiting in the in-tray for the new Trade Commissioner Phil Hogan when he moves offices in Brussels on 1 November.

Until then, of course, it is a matter for outgoing Trade Commissioner Cecelia Malmstrom, and the EU is believed to be assessing how it will react, with some indication likely next week on a response.

Given that the WTO is expected to award against Boeing early next year, the thinking is that the EU will react cautiously until that ruling is announced.

President Trump has been aggressive in his trade policy without WTO support until this point.

He will need little encouragement to use this position and yet given that both are among the top trading blocs with shared values in terms of government, there is a hope that a negotiated outcome will be reached.

Solution

Of course, that will fall into the lap of Commissioner Hogan who will have had plenty of experience with the US in his previous role with the TTIP negotiations on a new USA-EU trade deal that were suspended when the USA came into office.

One of the stumbling blocks ahead of President Trump's arrival was the issue of the EU position on hormone-treated beef, an issue which the USA successfully pursued the EU at the WTO more than a decade ago.

This was subsequently resolved by the creation of a hormone-free beef quota, of which 35,000t was ring fenced for the USA recently.

This indicates that trade spats between the EU and US are likely to get resolved eventually, but, in the meantime, Irish dairy farmers in particular will be anxious given that so many products are identified as targets for the 25% tariff.