May 17, 2020

Globalised supply chain to blame for horsemeat scandal?

Supply Chain
global logistics
globalisation
global logist
Freddie Pierce
2 min
Has globalisation left the supply chain exposed?
Once again the global supply chain has been criticised of stretching itself too thin. In a globalised market, some say, failures and miscommunications...

Once again the global supply chain has been criticised of stretching itself too thin.  In a globalised market, some say, failures and miscommunications are all too common from station to station.  Horsemeat is the word of the week, but the problem may run much deeper than equine errors.

"First is the focus on low cost, leaving very little 'meat on the bones' for any supplier. The supermarket competing on price looks for low-cost suppliers if it has to make money, which in turn look for even lower cost suppliers if they are to make money and so on. Each becomes highly,” said  ManMohin Sodhi

Elizabeth Dowler, professor of food and social policy at the University of Warwick, noted the root of the problem is that food has become a vast international industry whose main concern is the bottom line, saying: “Food is treated as a commodity. It is not seen as something that contributes to well-being.”

But Michael Walker, a science and food law consultant to British food-testing and analysis company LGC, said it will be hard for people to break their dependence on a complex food-supply chain, especially if they want year-round availability of a wide range of products.

Walker said the horse-meat scandal shows the system of testing and regulation is fallible, but not fundamentally broken.

Walker said the science of DNA testing that exposes adulterated meat is robust, but that regulators, many of whom are facing government budget cuts, needed to use more “intelligence-led sampling” to catch offenders.

“The ingenuity of fraudsters is almost infinite, but we must do our best to try and keep up,” he said.

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Jun 16, 2021

EU and US agree end to Airbus-Boeing supply chain tariffs

supplychain
Boeing
Airbus
tariffs
3 min
Supply chains embroiled in Airbus-Boeing dispute will no longer be impacted by $11.5bn tariffs imposed on food and beverage, aircraft and tobacco

The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic. 

Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years. 

It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC. 

The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn. 

In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products. 

Boeing-Airbus dispute by the numbers  

  • The dispute began in 2004
  • Tariffs suspended for 5 years 
  • $11.5bn worth of goods affected by tariffs
  • $3.3bn in duties paid by businesses to date 
  • 15% levy on aircraft and 25% on non-aircraft goods suspended

Both sides welcome end to tariffs 

European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.

“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.

Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”. 

The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."

This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.

Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”

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