Greek peach producers hit by tariff war between US and EU

A tariff war between the European Union (EU) and the United States (US) is threatening to buckle one of Greece’s most buoyant export sectors, which survived a decade of economic crises but possibly not President Donald Trump.

The Trump’s administration decision to impose an additional 25% tariff on a range of EU products in retaliation for EU aircraft subsidies, hits all products. In Greece, its prized canned peach.

Greece is the world’s biggest exporter of tinned peaches with about one fifth of its 250,000 tonnes annual production absorbed by the US market. Formerly subject to an import levy of 18%, the new tariffs - part of WTO-authorised countermeasures to Airbus subsidies - will increase the total import duty to the United States to 43%.

The people of northern Greece are not impressed.

“Trump would do well to behave himself and let us get to work so we can have a livelihood,” said peach farmer Tasos Halkidis. “We don’t want this tariff business.”

This fertile plain straddling the regions of Imathia and Pella in central Macedonia is one massive peach orchard. A sea of pink greets visitors in the spring, when the peaches are in bloom.

Standing in a huge warehouse piled high with millions of aluminium cans, 63-year-old Kostas Apostolou, head of the Greek Canners Association, says the dispute is threatening their livelihood and will potentially shut them out of their biggest market.

“Why are they punishing us?” Apostolou told Reuters.

The increase in tariffs came into effect on Oct.18, just as Greeks readied to ship 50 million tins to US markets.

Many customers there - mainly catering companies that supply hospitals, schools and the military - have either cancelled orders or have said they will not be prepared to pay for any tariff increase, producers said.

“Suddenly there was this trade war. We could never imagine that this could affect our jobs here in this small area,” Apostolou said.

Stuck with excess supply, producers are also uncomfortably aware how their production lines are tailored to the US market. The sector is saddled with 3-kg tins aimed at the United States, which cannot be sold in Europe, Asia or Latin America where 1-kg tins are dispatched.

The Canners Association and other industry experts say the income that will be lost from the US market is about $50 million - a small amount in terms of international trade but vital for one of the poorer regions in Greece with unemployment at 20%.

They are worried that resulting excess product will lead to a collapse in prices and unemployment will jump.

The heart of Greek peach country is planted with millions of trees in an area of more than 20,000 hectares (50,000 acres). About 10,000 small farms and 10,000 employees work for 17 can factories in the area, with the peach crop giving life to the wider Imathia and Pella regions.

“It’s a shock,” says Eleftherios Saitis, who built one of the first can factories in the early 1970s.

The sector is already reeling from the impact of a Russian embargo on the EU fruit and vegetable sector imposed in 2014. Farmers worry this might be the final blow.

“Now with the tariffs from the United States, it will be a very big hit, it will be a catastrophe,” said Halkidis.

Greece on Saturday welcomed its foreign debt rating upgrade by Standard and Poor’s as proof of further growth after a nearly decade-long debt crisis.

Emerging from its third straight bailout last year, Greece has a public debt of more than 180 per cent of gross domestic product and remains under strict supervision by its creditors.

S&P citing an improved budget outlook and solid growth prospects raised its grade for Greece’s foreign debt a notch to BB- on Friday.

“Greece’s sovereign debt rating upgrade by Standard & Poor’s proves that our economy is growing ever stronger,” Prime Minister Kyriakos Mitsotakis said in a tweet.

“Our reform agenda aims to attract investment, create jobs, accelerate growth and further restore trust in our economy. And we are fully committed to it”, he added.

Athens expects its economy to grow by 2.8 per cent in 2020 while respecting fiscal pledges to the country’s creditors, according to a draft budget released early this month.

“We project economic growth in Greece will average 2.5 per cent in 2019-2022, fueled mainly by a recovery in domestic demand,” S&P Global Ratings said in its statement.

Reuters