March 31, 2017. Luca Melchionna was interviewed by RaiNews24, Le Americhe, in response to the announcement that President Trump would be signing two new executive orders focused on international trade.
The first order ensures the collection of duties at the border; the second order addresses the US trade deficit. The two orders are broad and generic and will need time to become effective. It is a situation that we will continue to monitor. It is important to remember that the two orders will affect not only Italy but the major US trade partners, among which China, India, Japan, Mexico, Canada, and Germany.
What are the consequences for Italian companies? Italian products are well appreciated by American consumers who generally pay a premium for them. The U.S. represents a yearly market of $40Bn for Italians. However, a new duty cannot have the effect to create overnight a market simply because many Italian products do not exist in the US. Certainly, some protective measures are aimed to boost a comparative American production. But it is unlikely that some duties will create industries that do not exist currently. For some industries, like food, we know the situation with Italian sounding products: the ratio between them and Italian authentic products is 4 to 1, namely 1 out of 4 products sold in the US is Made in Italy. Therefore, a possible increase of the duty will not affect those American consumers willing to pay a premium for authenticity. However, many Italian products currently enter the US with little or no duty, something that the general public may not be aware. For example, Pasta (HTS 1902.19.20) is free of duties; as well as motorcycles (HTS 8701); bottled water (HTS 2201.10.11) is 0.26 cent per liter; Tomato (HTS 0702.00) 0.39 cent per kilo. As a matter of fact, the average duty on import is between 1.5% and 7%. A small number considered overall. The idea behind the plan to increase duties is to reduce the trade deficit with certain trading blocks (and therefore recouping money to reduce internal tax revenue). In the end, any measure adopted will only affect American consumers, those who will pay a regressive hidden tax to buy real Italian products.
What the remedies? The WTO is the natural body for countries to address their concerns if they feel that new measures are overreaching or unfair. The Italian government may raise questions within the WTO appropriate dispute resolution body if and when retained proper and legitimate. Then, bilateral negotiations are the other forum for national and regional partners: the US and the EU will certainly have opportunities to renegotiate their deals.
What remedies are available for Italian companies? Italian manufacturers have little remedies against the US government: they will pass on to their American consumers the additional cost. Only in certain instances, there may be the possibility to invoke the application of few federal regulations. http://www.rainews.it/dl/rainews/live/ContentItem-3156f2f2-dc70-4953-8e2f-70d7489d4ce9.html