Blog Posts Ellen Huan-Niemi Agriculture, Food

According to the United States Department of Agriculture (USDA), the United States (US) faced a record of $12 billion trade deficit in agricultural and food products with the European Union (EU); meanwhile the US had a $16 billion agricultural trade surplus with the rest of the world in 2015. The US agenda in the Transatlantic Trade and Investment Partnership (TTIP) negotiations will definitely include the total liberalisation of agricultural tariffs and the removal of non-tariff measures (NTMs) in order to propel the export growth of consumer-oriented agricultural and food products to the EU and close-up the agricultural trade deficit with the EU. The main reason is that the US will experience a tremendous increase in the exports of agricultural products to the EU under the TTIP, especially for meat, dairy and other processed food products.

In stark contrast, the EU agricultural exports to the US will grow at a slower pace compared to the US under the TTIP, and the growth is concentrated on beverages, vegetable oil, dairy and other processed food products. These are the results from Luke’s research funded by the Ministry of Agriculture and Forestry in Finland. These results are similar to the results from an earlier research report commissioned by the European Parliament on the “risks and opportunities for the EU agri-food sector in a possible EU-US trade agreement.” Furthermore, the recent USDA research report on “agriculture in the Transatlantic Trade and Investment Partnership: tariffs, tariff-rate quotas, and non-tariff measures” has also similar results, whereby the free trade of agricultural and food products with the removal of non-tariff measures under the TTIP will drive the US agricultural trade balance with the EU from a large trade deficit into a trade surplus.

Greenpeace leak on the TTIP negotiations

The TTIP negotiating drafts and internal positions leaked by Greenpeace indicated that the US was using the issue of export controls on European cars to push the EU into opening up its market to the exports of US agricultural and food products. It is evident that the US has much lower tariff barriers for agricultural and food products compared to the EU, thus the EU has been very successful in exporting consumer food products to the US, especially beverages such as spirits & liqueurs, wine & vermouth, beer, and waters that are accounting for half of the EU agricultural and food exports to the US.

As a result, the EU has been experiencing a trade surplus in agricultural and food products with the US for the past 17 years, and the trade surplus has been growing continuously since 1999 with concentrated growth in high value consumer products. Therefore, there is no doubt that the US has an aggressive position in opening up the lucrative EU market for agricultural and food products in order to balance the success achieved by the EU exporters in the US market. The EU market is difficult to enter not only due to the high tariff barriers, but also food safety standards and issues.

Differences in the EU and US policies

The EU and the US have very different agricultural and food policies; hence many trade disputes have arisen between them in recent decades. For example, the beef hormones conflict and the use of the growth promoter ractopamine, the application of antimicrobial rinses in the processing of poultry meat in the slaughter houses (pathogen reduction treatments: PRTs), differences over genetically engineered crops and food products (GMOs), cloning of food animals, and the EU system of protecting geographical indications (GIs) such as champagne and parmesan.

The research results implied that strong preference for EU domestic products and labels by the EU consumers may be able to decrease the US export potential to the EU market, and thus justifying the strong push by the EU for geographically protected labels and the US refusal to accept them. Therefore, food safety regulations, standards and geographical indications are the hardest part of the TTIP negotiations in addition to abolishing tariffs concerning agriculture. As far as the EU is concerned according to Politico’s newsflash, all the tariff plans have been put on the table and only 3 percent of tariff plans which are not yet offered are solely tariff plans for agriculture. The amount of sensitive agricultural and food products to be allowed under the TTIP will be a major source of conflict between the EU and US.

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