Chip war, the United States is the real loser
Halbert Gray January 8, 2023 5 min read
The story seems to be too simple and irrelevant: Four years later, Belgium won a legal dispute against Colombia, which charged a duty of between 3 and 8 percent on its French fries.
Indeed, for several years the word of tariffs has sparked even more intense trade battles, starting with the clash between the United States and China and Trump's massive tariff curbs in 2018 on steel (25 percent) and aluminum (10 percent). Hundred), then Biden removed it in 2021 at least for European producers.
However, the dispute over potato chips has its significance, and in one aspect at least it is excellent news also for countries like ours, which also do not have a large export of tubers, but above all it is a setback for the United States.
The controversy began in 2018, when Colombia decided to penalize imports of frozen french fries for tax purposes to protect its producers: Belgium, the Netherlands and Germany accuse Bogotá of invading our market with artificially low-cost products. It is not an unrelated phenomenon in the economy of Colombia, where the production, processing and marketing of potatoes is the economic focus of about 400,000 families.
But Belgium and the Netherlands cannot accept retaliation without reacting. Partly to the question of the image, since fried potatoes are the gastronomic pride and national dish of Belgium (and it doesn't matter if the Europeans had to find out about the presence of potatoes, the Europeans had to wait for Columbus to cross the American continent). But above all an economic issue of absolute importance. If we talk about potatoes in general, then the first producer in the world is China, in second place is India, and then – at least according to pre-war data – Russia and Ukraine. To find Belgium you have to go past 20th place, ahead of Colombia but with a huge gap. The truth is that if we talk instead of frozen French fries, the map changes completely, given that in this limited sector more than half of world exports are in the hands of Belgium (28 percent) and the Netherlands (24 percent).
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In essence: Belgium is a mediocre potato producer on a global scale, but 90% of its production is frozen and exported as french fries. Therefore, in the face of Colombian fees, which significantly restrict access to the 20 million euro market, he cannot sit idly by. He is thus asking the EU to condemn the Colombian anti-dumping policies of the WTO, the World Trade Organization. Europe takes exactly one year to kick off: In November 2019, the European Commissioner for Trade, Sweden's liberal Cecilia Malmström (Juncker committee still in Brussels) denounced the Colombian tariffs. The complaint begins its procedures and in a few months for Belgium it turns from an important file into a strategic issue: in 2020 the lockdown is triggered to contain Covid and domestic consumption, with the closure of restaurants and fast food restaurants. Romain Coles, general secretary of Belgapom – a kind of Belgian potato union – requires his countrymen to eat French fries at least twice a week, with 750,000 tonnes of the product likely to end up in pulp instead of freezers. Among other things, not only have Covid and lockdowns reduced the absorptive capacity of many overseas as well as domestic markets, but new countries have also begun to target low-cost Belgian exports, with New Zealand speaking openly about dumping and studies of retaliatory interactions.
For Belgium, the WTO ruling becomes more urgent than ever, which would block access to the Colombian market and above all discourage other countries from penalizing exports worth $2 billion annually for the small European country. And finally, in October 2022, the WTO ruling arrived in Belgium's favour: duties must be abolished. Colombia, of course, does not agree and wants to appeal, but there is a problem: boycotting the WTO judiciary, which has caused more than one discontent with it and seems increasingly pro-Chinese, America is preventing the appointment of WTO representatives. Appellate body. And without a second-level trial – lawyer Filippo Fontanelli has stated in recent days in Corriere della Sera – the decisions of the court of first instance, if challenged, remain without effect. But a solution to the frites has been found, and that is what makes the outcome of the dispute so important not only for Belgium but for all countries that have so far seen their applications for commercial jurisdiction frustrated by the stagnation imposed by us. And it is – explained ANSA after the pronouncement – the first case on appeal that was dealt with according to a procedural agreement implemented by many countries to compensate for the paralysis. The ruling is made possible by the fact that Colombia, like 17 other countries and the European Union, is part of the MPIA, the Multilateral Interim Arbitration Arrangement. So, from a general standpoint, Belgian fries are more indigestible to Washington than Bogota is, given that in their name an embryo of business regulation hitherto hitherto "America First"-style protectionism was cooped up in the freezer. .
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And to believe that in 2003 the United States chose French fries precisely as a field for symbolic retaliation was not subject to WTO rule: disgusted by Chirac's refusal to support the UN invasion of Iraq, there are quite a few American restaurants and even congressional menus renamed "Liberty fries" were what were known until then as "french fries". But the retaliation had little effect: The French Embassy declined to comment, the French mustard maker had to scramble to explain to consumers that it was a nickname rather than a reference to geographic origin, and a 2005 Gallup poll found that if 33 percent of Americans would change the naming of their potato chips "patriotic" , as opposed to 66 "dumb ideas". In 2006 congressional lists reverted to the "French" reference. It is not known if the California restaurant that launched "Impeach Gerge W. Bush Fries" did the same after the invasion of Iraq.
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