Agrifood lobby may derail EU-US trade talks

The European Commission was given the green light last week to begin talks with the US on agreements to enable tariffs on industrial goods to be slashed by €26bn.

Agrifood lobby may derail EU-US trade talks

The European Commission was given the green light last week to begin talks with the US on agreements to enable tariffs on industrial goods to be slashed by €26bn.

More importantly, talks will begin for the differing regulations controlling imports of pharmaceuticals and other controlled goods to be mutually accepted by each region.

The EU is anxious to push the message that a new free trade agreement will be a win-win for exporters in both jurisdictions, but the EU has agreed everything is on the table for negotiations except agricultural products.

This is good news for Irish farmers and the wide range of agrifood producers here, but the US agrifood sector had high hopes that some of the long-standing concerns regarding the EU’s policies on agricultural biotechnology and pesticide laws would be addressed.

With the EU now formally excluding agriculture, it will be difficult, if not impossible, to address these non-tariff barriers that severely inhibit trade between the two regions.

Agrifood associations in the US have already called on President Donald Trump to push back on the EU and insist that these vital agriculture issues are addressed either in the context of a free trade agreement or through bilateral talks.

There are two aspects to the proposed agreement, elimination of tariffs on goods, excluding agriculture, and regulatory conformity whose goal would be to makme it easier for companies to prove their products meet technical requirements for release into markets both in the EU and the US.

Of particular interest to Ireland is the high cost and time delays meeting the different regulations controlling the development and approval of new pharmaceuticals in both the EU and the US.

Agreement of mutual recognition by the European Medical Agency and the US Food and Drugs administration has the potential to save the pharma industry hundreds of millions in both jurisdictions annually.

US foreign direct investment into Ireland could also be further facilitated if the proposed liberalisation in business services, royalties, and licences are delivered on through the agreement.

The stakes in EU-US trade negotiations are always high; already they have the largest and deepest bilateral trade and investment relationship in the world and have highly integrated economies.

Negotiating tactics have been brought to a fractious level, but the EU negotiators have decided to play Mr Trump and his hard-line international trade negotiators at his own hardball tactics.

The EU opening offer states that it will not conclude negotiations with the US as long as the current tariffs on EU exports of steel and aluminium remain in place, and that it would be able to suspend negotiations unilaterally if the US were to impose further trade restrictions against EU products.

Further evidence of a toughening in EU stance was the announcement releasing a provisional list of US agricultural goods, including soybeans.

The significance of this will not be lost on the Trump administration, which has already lost important soybean exports to China in their ongoing trade spat.

According to the EU, between February 2018 and January 2019, the value of agrifood imports from the US increased by 14%. This represents an increase in value of €1.5bn, mainly due to the increase in imports of soybeans, soybean oil cakes and several other products.

The EU is now ready to launch negotiations with the US which will cover the set of issues stemming from the July 2018 joint statement of commission president Jean-Claude Juncker and Mr Trump.

Much will depend on the agricultural issues and the pressure by lobby groups on both sides. Many will recall that the last major global trade deal — the Doha Round, which the WTO tried for many years to negotiate — unfortunately died in 2008 because agribusiness lobbies in the US and EU put sustained political pressure on their negotiators.

The EU also clarified last week that the negotiating directives for the Transatlantic Trade and Investment Partnership agreed in June 2013 must be considered obsolete and no longer relevant.

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