By Philip Blenkinsop
BRUSSELS, Jan 21 (Reuters) – U.S. customs authorities will face a real challenge if President Donald Trump goes through with his threat to place tariffs on six EU countries – rather than the whole European Union – given the ease of movement of goods between EU members.
Trump has vowed to place increasing tariffs on goods from EU members Denmark, Finland, France, Germany, the Netherlands and Sweden, as well as non-EU states Norway and Britain, until the United States was allowed to buy Greenland.
TECHNICALLY POSSIBLE, BUREAUCRATICALLY COMPLEX
Under EU rules, goods manufactured in the bloc are only marked as being of EU origin, but a third country can require information is provided by individual EU members.
It can be difficult to determine that a good is made in a single EU member, however, because of extensive cross-border supply chains and the ability to transport goods from one EU member to another without customs controls. Establishing the origin of goods would be a complex task for U.S. customs authorities.
Niclas Poitiers, research fellow at Bruegel, said it would probably not be difficult for smaller companies to obscure the production location of their products, while larger firms with more transparent supply chains might decide to shift production to EU countries not targeted by the measures.
CAN U.S. TARGET BRANDS?
Brand names are generally associated with specific countries, but production can take place elsewhere.
Carmaker Volkswagen, for example, manufactures cars in Germany, but also in Slovakia, while Sweden’s Volvo Cars has a factory in Ghent, Belgium with a similar capacity to the plant at its Gothenburg headquarters, which makes Volvo’s top-selling XC60.
Volvo has shifted output following tariffs. It will start making the XC60 in the U.S. at the end of the year and has increased production of electric vehicles in Belgium after the EU placed tariffs on China-built EVs, but the timeframe for such switches has typically been at least a year.
WHAT ABOUT FRENCH WINES AND CHEESES?
Well-known EU foods and drinks, such as French champagne or Camembert, may be more easily targeted because they are marketed and sold in ways that highlight their heritage and origins.
Reinforcing this, the European Union has a system of “geographical indications”, or GIs, granting intellectual property rights to some 4,000 products linked to particular areas of production, from Italy’s Parma ham to Spain’s Manchego cheese and Greece’s Kalamata olives. As a result, the term “champagne”, for example, can only be used for a sparkling wine made in the Champagne region in the northeast of France or “feta” for a specific cheese from Greece.
The United States has repeatedly denounced the system as protectionist, particularly when it is included in the EU’s trade agreements to ensure foreign partners also agree to respect the protected status of a range of products.
Of the six targeted countries, France has the most GIs.
(Reporting by Philip Blenkinsop; additional reporting by Louise Rasmussen, Marie Mannes in Stockholm; Editing by Alex Richardson)
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