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EU Trade Partnership Launched

DC Dialogue

Ag groups cautiously optimistic about promise of EU trade deal which could also undermine WTO and Doha Round negotiations.

Published on: February 22, 2013

Following up on comments made in President Barack Obama's State of the Union address, leaders from the United States and European Union launched talks Feb. 13 on a comprehensive Transatlantic Trade and Investment Partnership with the European Union. However, ag groups remain cautiously optimistic as to whether the many protectionism hurdles the EU has in place can come down to achieve a true level playing field within any trade agreement.

A joint statement from Obama, European Council president Herman Van Rompuy and European Commission president José Manuel Barroso said the transatlantic economic relationship is already the world's largest, "accounting for half of global economic output and nearly one trillion dollars in goods and services trade, and supporting millions of jobs on both sides of the Atlantic."

It could take two years to work through some of the dicey regulatory divisions that exist between the two economic superpowers. EU regulations on genetically modified crops have always been a divisive issue. EU also has fought to maintain their level of subsidies and protect specific agricultural sectors.

Official talks could begin in late May or early June reports indicated.

Marcel Fratzscher noted in an opinion column at The Financial Times Online that, “There is a lot of hype about the prospects of an EU-US free trade agreement, especially in the wake of Barack Obama’s State of the Union address last week. Supporters point to the benefits such an agreement could bring to both economies. Yet the costs are likely to outweigh the benefits. Most importantly, a transatlantic deal will undermine multilateralism, in particular the long-overdue completion of the Doha round, and weaken multilateral institutions such as the World Trade Organization."

American Farm Bureau Federation President Bob Stallman said that the Farm Bureau is "cautiously hopeful that these negotiations will yield positive results for U.S. agriculture.” He added that, “The misuse of sanitary and phytosanitary standards, including the EU’s restrictions on genetically engineered crops, has long been a tactic to impede trade. We will look closely to these negotiations to move past this trade distorting tactic and fully embrace a rules-based trading system with standards based upon scientific assessment.”

news release from the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) stated that, potential exists if the agreement tackles not only market access issues but also the "many nontariff barriers that have made it challenging for the United States to make more headway into the European dairy market," said Jerry Kozak, president and chief executive officer of NMPF.

USDEC president Tom Suber said U.S. dairy exports to the EU have lagged and totaled only $88 million last year. Currently the EU enjoys a dairy trade surplus with the United States of $1.2 billion. The groups state that U.S. exports to the EU are hindered by significant tariffs, as well as sizeable regulatory barriers such as requirements unrelated to food safety with respect to somatic cell count limits for imported dairy producers, tariff-rate quota administration details, cumbersome mandates related to certificate dating, bans on use of generic food names and other requirements.

"If the EU wants access to our dairy market and wants us to consider regulatory changes to our system, which is based on sound science, the burden is certainly on them to demonstrate that this is a two-way street and that our concerns have been fully resolved given the EU's track record in this area," Kozak noted.

Poultry groups said chief among the non-trade barrier issues is the EU's prohibition against pathogen-reduction treatments for poultry. The result of this non-science based action is that the United States has not been able to export poultry to the EU since 1997. "When negotiations are successfully concluded, U.S. poultry producers look forward to marketing over $500 million of products to the EU on an annual basis," the National Chicken Council, National Turkey Federation, USA Poultry & Egg Export Council and U.S. Poultry & Egg Association said in a joint statement.