Association of Food Industries

2020 Processed Foods Report

Josh Gellert
Camerican International

The biggest issue facing members of AFI’s Processed Foods Section over the past year has been tariffs. There were lots of questions, among them: Were our products going to subject to punitive tariffs? Why were our products being considered to be on the various lists of products subject to those tariffs? When would the tariffs go into effect? What would the punitive tariff rate be?

Though there were other tariff actions, I’m going to focus on the disputes with China and the European Union because those impacted more members than the other disputes.

China is the longer running of the two disputes. There are five lists of existing and potential tariff items. Agricultural products were spared on the first two lists. We weren’t so fortunate on the third and fourth lists. In fact, hundreds of food items were included on the third list and continue to be subject to an additional punitive duty of 25 percent. The fourth list also contained hundreds of food items. Duties of 15 percent were imposed on Sept. 1, 2019. Following the announcement of a partial agreement between the two countries, the U.S. reduced the duties on the items on that list to 7.5 percent as of Feb. 14, 2020. Imposition of tariffs on the fifth proposed list, which contains only a few food items, was postponed following the partial agreement.

While we’re all pleased to see some progress, U.S. companies are still paying penalties designed to punish China and there’s still no indication as to how long the tariffs will remain in place. There’s also no way to plan for what might happen if the negotiations hit a roadblock. 

The EU situation is a different kind of dispute. The U.S. won a World Trade Organization case that allowed it to impose tariffs on EU products. As is always the case, the country that wins the right to impose tariffs puts out a list or targeted products that far exceeds the amount granted by the WTO. It’s done to make as many residents and businesses in the other party’s country or countries upset about the proposed tariffs that as many as possible will put pressure on their government(s) to rectify the situation. In this instance, the U.S. put out two lists of possible products – the value of those products being approximately four times the ultimate figure set by the WTO panel. 

Again, hundreds of food products were included as potential targets. This created even more angst than the China dispute because the punitive duties on the EU products could have been as much as 100 percent and many companies import many of the products that were on the potential list.

In addition to submitting comments from the association, AFI helped its members submit comments by providing templates we could use to submit our own and a template we could send to our customers to make it easier for them to submit comments. While there’s no way anyone can know if any comments had any impact on what products ended up on the final list, the industry’s voice is important and must be heard.

When the list was revised in late January, the major change was to increase the punitive tariff on airplane components – the sector involved in the initial dispute. Perhaps that came about because so many people in the food sector and other industries voiced displeasure with paying the price for a dispute with no ties to them.

There’s some good news on tariffs, however. As it’s done since the early 2000s, AFI coordinated efforts to help its members seek temporary duty suspensions on several products via the Miscellaneous Tariff Bill. 

Through the MTB, requests are made for temporary duty reductions or eliminations on products where there is little or no domestic production. Essentially, the MTB allows for a reduction in duties collected for each Harmonized Tariff Schedule number submitted of up to $500,000 per year. So every time AFI is successful in getting items included on the MTB, we’re eliminating up to $1.5 million in costs from the system for each of those HTS numbers over three years. It’s a process that’s supposed to take place every three years, though Congress has not always kept to that schedule.

Though Congress doesn’t keep to its schedule, those of us filing MTB petitions must. The current suspensions are in place through the end of 2020 but the work for the next renewal period began in the summer of 2019. Petitions regarding items such as pepperoncini and processed artichokes have been filed. Now we wait to see when Congress acts. 

Association of Food Industries: Serving the U.S. Food Import Trade Since 1906
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