Agriculture Remains a Sticking Point to US–EU Trade Deal

Farmer Mark Catterton drives a John Deere Harvester while harvesting soybeans during his fall harvest in Owings, Maryland on Oct. 19, 2018. Mark Wilson/Getty Images

WASHINGTON—There is a lack of clarity surrounding the future of a U.S.–EU trade deal as European leaders may resist lifting import barriers to American agriculture.

A coalition of more than 50 food and agriculture organizations in the United States insist that any trade deal with the EU should include American agriculture products.

The coalition led by the National Pork Producers Council (NPPC) sent a letter to the Office of the U.S. Trade Representative (USTR) on Dec. 18 asking Washington to pressure Brussels on lifting import barriers that protect European farmers and removing regulatory measures that are overly restrictive for U.S. products.

“Our trade deficit in food and agricultural goods with the EU has ballooned from $1.8 billion in 2000 to nearly $11 billion last year,” stated the letter. “This is not because European consumers do not want American products. It is because EU tariffs and non-science-based regulations deny consumers a choice.”

According to NPPC, the EU is the second largest pork-consuming market in the world. EU’s high tariff and non-tariff barriers, however, restrict U.S. pork exports to European countries.

Non-tariff barriers such as standards and requirements that products must meet in order to be placed in the EU market creates a challenging environment for U.S. exporters. According to a 2018 report released by the U.S. trade representative, some EU regulations are unclear and difficult to comply with.

For example, EU’s safety and sanitary guidelines for meat products are unnecessarily restricting trade without furthering the food safety objectives because they are not based on scientific principles, the report claims. The EU also does not accept international standards even if, for certain products, they are equal or superior quality to the European standards.

Dermot Hayes, an economist at Iowa State University predicts that the elimination of these barriers would bring billions of dollars in new exports and create about 18,000 new American jobs.

“The EU has played the United States like a drum in the past. This must stop,” said Jim Heimerl, NPPC president and a pork producer from Ohio.

Long-term Sticking Point

Under President Obama, the United States launched talks on a sweeping trade deal called Transatlantic Trade and Investment Partnership with the EU. And agriculture had already been a sticking point during those negotiations. Both sides failed to reach a deal by the end of Obama’s presidency.

When President Donald Trump took office, he canceled the negotiations in one of his first acts. And he launched new talks with the EU in July last year, agreeing in a joint statement to “work together towards zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods.”

As part of the deal, the EU pledged to buy more soybeans and liquefied natural gas (LNG) from the United States. The bloc kept its promise and doubled its U.S. soybean export since July. American soybeans now account for 69 percent of the EU market, according to a Wall Street Journal report. LNG exports also rose by more than 50 percent during the same period.

EU officials, however, have been reluctant to include U.S. agriculture in the negotiations, which continues to be a major issue between Washington and Brussels.

Washington insists on including agriculture in the future agreement, but the European Union has no mandate to do that, said Heather Conley, senior vice president and director of the Europe program at the Center for Strategic International Studies.

“Certainly there are very strong voices—French government voices, in particular—that do not want that to happen,” she added.

The EU Commission expects to receive a mandate from the member states for the negotiations in early 2019. This mandate will determine the parameters for EU positions in the negotiations.

If agriculture is omitted from the mandate, this will preordain failure of the negotiations before they begin, warned the nation’s food and farming sector players in their letter.

U.S. Trade Representative Robert Lighthizer is scheduled to meet his counterpart, Cecilia Malmström, EU Trade Commissioner in Washington on Jan. 9 to continue negotiations. Both sides met in November and discussed regulatory cooperation issues and the parameters of future negotiations.

After the meeting, Malmström told reporters that they had discussed enabling EU countries to buy more U.S. soybeans and LNG. She also said that Brussels wanted to do a limited trade deal on industrial goods, including autos, to reduce tariff rates to zero for both sides.

However, the scope of these talks can only be determined in 2019 when the USTR completes its consultation process with the U.S. Congress and EU receives a negotiating mandate from member states to launch formal talks with Washington.

The U.S. goods trade deficit with the EU was $151.4 billion in 2017, which is a top concern for Trump. The deficit is expected to be higher in 2018.

According to the USTR, U.S. exporters face persistent barriers to entering the EU market. And some of these barriers have been there for years despite repeated efforts by the U.S. officials to resolve them through bilateral talks or World Trade Organization dispute settlement.