Witnesses for France Section 301 Hearing Largely Against Tariffs
Three dozen witnesses are scheduled to testify Jan. 7 on the appropriateness of levying tariffs on French handbags, makeup, champagne, enamel cookware, cheese, butter and yogurt in retaliation for a proposed digital services tax -- and some of the organizations that represent the companies that would be most affected by the tax are not asking for tariffs. In fact, only the National Milk Producers Federation, the Computer & Communications Industry Association and Baker McKenzie say that the Office of the U.S. Trade Representative should use tariffs to pressure France to abandon a DST.
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“CCIA takes this opportunity to stress its position that USTR should consider all options and remedies available,” it said. On the other hand, the Information Technology Industry Council will testify: “We support the U.S. government’s efforts to investigate these complex trade issues but urge it to pursue the 301 investigation in a spirit of international cooperation and without using tariffs as a remedy.”
About half of the in-person witnesses will address the targeting of champagne, which follows the targeting of non-sparkling wines from France with a 25 percent tariff in retaliation for Airbus subsidies. Separately, the USTR has told the public it could hike those tariffs on wine to 100 percent.
There were more than 1,500 comments at regulations.gov, and a large proportion of them were also arguing that the tax on wine hurts small American retailers, wine salespeople and importers.
The Wine and Spirits Wholesalers of America's former chairman, Barkley Stuart, will testify about the lost sales that could come if USTR puts 100 percent tariffs on $743 million worth of sparkling wine imports from France -- 12 percent of all wine imports, he said. Stuart said a 100 percent tariff leads to a price increase on wine of 2.5 percent -- which would lead to a 1.84 percent reduction in wine sales, according to economists hired by the trade association.
The Section 301 target list does not include any of France's top five exports to the U.S. -- aircraft engines and their parts; aircraft; spirits; art; and medicine. Wine is the sixth-largest export from France, by value.
With regard to cheese and yogurt, there are six opponents of the tariffs scheduled to testify, along with the National Milk Producers Federation, which argues that non-tariff barriers such as the exclusive use of names such as Roquefort and Muenster, Gruyere and Neufchatel justifies the tariffs on French dairy products. They note that the U.S. imported more than $260 million in French dairy products in 2018, while France imported $4 million in American dairy products.
Bel Brands USA, which includes Laughing Cow and Boursin cheeses, will note that their operations were excluded from the Airbus list in the previous round, and that in addition to about 1,000 U.S. employees they already have, the company is “in the process of moving production of its cheese products to the United States, and tariffs will disrupt this ongoing new job creation in the United States.”
Materne North America also will note that its shelf-stable yogurt was removed from the Airbus list, and it deserves the same treatment again.