Agriculture: significant cultural differences

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June 3, 2013 by Silvana Bolocan

Perhaps more than any of the other trade sectors, the EU and the US differ in fundamental ways in their approach to food production and consumer protection. The differences are historic and cultural stemming from the different development paths of the communities on the two sides of the Atlantic.

The European agricultural sector is heavily subsidised and protected, benefiting from the lion’s share of the Community’s budget, despite attempts, in the past years, to reduce it. The EU agricultural production benefits from substantial access barriers for a wide range of products. At the same time, it is notoriously resistant to the introduction of new biotechnologies and GMO’s. In its approach to risk management, the EU guides itself by a “precautionary principle” in the application of the WTO’s SPS Agreement, whereby health-related preventative measures can be applied, including import restrictions, when it is scientifically uncertain but possible that a risk exists.

On the other hand, the US has very few sectors that require to be protected with significant access barriers and an open position in negotiations, including virtually all agricultural products to negotiating FTA’s.

It is not clear, at this point, what the future TTIP negotiations will include under the trade in agricultural products heading. The negotiations will be more lengthy and complex depending on the extent of the issues that will be brought to negotiations. An attempt by the US – pressured by the agricultural sector – to include all significant SPS issues as part of a single comprehensive TTIP agreement may lead to long and strenuous negotiations which may extend well beyond 2014 – the deadline set by both Pres. Obama and the European Commission for finalizing the negotiations. The long trade dispute between the EU and the US over the hormone treated beef is telling for the public sensitivity and the complexity that such negotiations may acquire. The difficulty of negotiations in this sector are also evident in the last outstanding issues that still holds back the closing of negotiations on the free trade agreement between the EU and Canada: beef and pork.

Areas of disagreement between the EU and the US:
– Poultry: the EU has banned the chlorine wash of poultry, which has caused the US to file an ongoing case at the WTO;
– Pork: the EU’s ban on the growth-promoting additive ractopamine, which is widely uised in the US pork industry;
– Wine: with the EU’s efforts to maintain exclusive use of terms like reserve, classic and chateau on wine labels;
– Geographical indications: more generally including products designations originally deriving from production in a specific geograhpical location.
– EU’s restrictions on imports of genetically modified foods: which tops the list of complaints from the US’s side. There are 72 products pending approval by the EU, only 6 products were approved in 2012 and the average approval processing tims is 40 months.

The EU’s and US’s agricultural sectors are highly competitive sectors, with the EU reaching, in 2012, a new record in agricultural trade surpluss. According to a study published by the European Commission, the growth in demand for EU products is essentially driven by export markets (especially developing economies) rather than by the economically depressed EU domestic market.

http://waysandmeans.house.gov/calendar/eventsingle.aspx?EventID=333264
http://ec.europa.eu/agriculture/trade-analysis/map/2013-1_en.pdf

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