Duties: damages of 360 million for Made in Italy exports

On 2 October, the World Trade Organization (WTO) issued its decision on the dispute that began in 2004 over European subsidies to Airbus, stating that European state aid has distorted competition by reducing the sales of US civil aircraft Boeing hindering its exports to the markets of the EU, Australia, China, Korea, Singapore and the United Arab Emirates. The value of the countermeasures that the USA can request from the EU is also indicated at 7,5 billion dollars. There United States Trade Representative (USTR) has already announced the list of products subject to duties which is expected to come into force on 18 October: commercial aircraft from France, Germany, Spain and England will be subject to an ad valorem duty of 10%, while most of the other goods will be subject to a duty of 25%.

Among these, the list makes a clear differentiation based on the markets of origin. The affected German products, for example, mainly concern mechanical equipment and industrial tools, while for almost all other EU countries, it is mainly agri-food products that are affected. Even Italy, which does not participate in the Airbus consortium, is hit in the agri-food sector with ad valorem duties of 25% on a rather limited category of products. Analysts predict that due to the limited extension of Italian goods on the USTR list, in the end the effects on Made in Italy exports will be rather limited: around 360 million euros of Italian exports in the agri-food sector will be subject to duties , equal to 0,8% of the total to the USA.

After the modest recovery recorded in the last two years, Italy entered a recession in the second half of 2018, and zero GDP growth (+2019%) is forecast for 0,1, i.e. substantial stagnation, mainly due to contained domestic demand. Private consumption should continue to be stagnant, while a contraction in fixed investment and industrial production is expected. Furthermore, the economic outlook is aggravated by continued political uncertainty, the slow recovery of the banking sector, the tightening of credit conditions and the slowdown in trade and demand in the euro area. And while Italy's banking sector has improved since 2017, many banks are still suffering from non-performing loans, high operating costs and low profitability. Previous reform efforts have been insufficient to stimulate higher growth rates and the country's competitiveness has not significantly improved compared with that of its EU partners. Confidence in public finances is weak, as the fiscal deficit is projected to increase by more than 2,5% in 2019 and 2020, with an even higher public debt-to-GDP ratio, due to the increase in public spending.

In line with the timid economic recovery of recent years, corporate insolvencies recorded an annual decline between 2015 and 2018, while the number of bankruptcies remained much higher than in 2008 (7500 cases). Due to economic slackness, heightened political uncertainty and tighter credit conditions, global business failures are expected to rise by around 4% this year. The liquidity problems of Italian companies are still aggravated by continuous payment defaults, above all by the public sector: with the exception of the food and chemical sectors, the duration of payments is still very long (90-120 days), thus putting a strain try small suppliers. And in the context of the new duties, dairy products will be hit above all, for a value of 260 million euros, equal to about 0,60% of Italian exports to the USA. In addition to cheese, exports of spirits (75 million), sausages (12 million), beverages (430 thousand euros) and fruit and citrus fruits (8 million) will be affected.

Read the complete list of affected Italian products.