The EU and the US are tied up in yet another trade spat, with a bumpy road ahead. U.S. Trade Representative Robert Lighthizer recently stated that “there’s not going to be an FTA without agriculture”, echoed by the US congress’s bipartisan letter to include agricultural issues in the agreement. While the spotlight in Brussels has lately been on car tariffs, the EU’s agricultural market could be the bigger prize Donald Trump is after – and Brussels’ response could have implications for its own trade policy. Food or cars?
Donald Trump is not the first US President that criticises the EU’s agricultural policies. But even if Brussels’s trade negotiators were inclined to make concessions to safeguard the other industries which this trade spat is hitting, agriculture is simply not on the table. At least three groups will fight tooth and nail to protect the EU’s agricultural market vis-à-vis the US. European farmers will complain about competition, consumers will demand protection of food safety and key member states will strongly defend geographical indications (GIs).
- EU farmers
European farmers are impressively mobilised on trade issues, especially when the EU is negotiating with a large country. In the US case, they have a point. American farmers are allowed to use more pesticides allowing for cheaper and more efficient production. European producers could not compete with these imports, unless Brussels eases up its food standards. Farmers are well represented in the European Parliament, with particularly strong ties to the EPP, ECR and the far right. In an election year, even pro trade MEPs will be careful to avoid major farmer protests, especially when the EU is already negotiating trade agreements with partners that have a competitive agricultural sector like Australia or MERCOSUR.
- EU consumers
The second major interest group which has been a powerful voice on agricultural issues are EU consumers. European consumers care deeply about food safety and are willing to pay more for their food so long as this is produced abiding by higher regulatory standards. Risk perceptions are key here, and these different approaches stem from deeply rooted values on what food can be considered safe. There is a long-standing dispute between the EU and the US about the safety of GMO (Genetically modified organism) products. Washington points out that GMOs can be termed as safe unless there is strong scientific evidence suggesting the contrary. The EU flips the question; can we be sure that GMOs pose no health risks? This debate between the American “science-based” argument and the EU’s precautionary principle cannot be solved easily. Regulatory choices inherently involve a value judgment of what good or bad is – which is where EU consumers will inevitably always draw the line. Such preferences depend on differences in societal values, which trade agreements cannot solve. Again, in an election year that might question the very usefulness EU rules and jeopardizing one of the distinctive features of the European market seems suicidal.
- Member State governments
The last – but by all means not least – critical group which opposes the inclusion of agriculture in trade negotiations are key member state governments, such as Italy and France. They strongly defend European GIs – intellectual property protection given to specific products. Again, different cultural approaches clash: trademarks in the US are given to individual businesses, while the EU defines them regionally. Examples are Feta cheese from Greece, Champagne from France and Parmesan cheese from Italy. Governments see these products as part of their national identities, and they vigorously defend them. Moreover, as they see global competition mounting from all sides, Member States will surely rein in the Commission before it acts without their blessing.
What next?
Agriculture is a sensitive topic on all fronts and can mobilise European constituencies very quickly. Trump’s threats to extol concessions from the EU just further antagonises domestic groups to negotiations, with a potential knock-on effect for other trade deals. Can EU manufacturing interests trump agricultural ones? So far it does not seem so. The European Parliament has failed to come up with a resolution for EU-US trade talks, showing how controversial the topic is. French President Emmanuel Macron was quite vocal in protecting the EU’s agricultural interests and France is likely to vote down any comprehensive deal with the US.
The US will start gearing up for the 2020 presidential elections at the end of the year, so just like with the revised NAFTA, Trump needs something that he can sell to his electoral base. The President is under heavy pressure from his own domestic agricultural groups, in light of the reduced market access for their products in China. Closer to home, the EU will soon hold its parliamentary elections and appoint a new trade commissioner. It will be unlikely that the EU would accept any new deal before November, which gives Trump a very narrow window to deliver results in time for US elections. Brussels is keen on keeping the talks open: for the EU, going back to the status quo ante is a win, with agriculture safely back on the shelf.
Any agreement should be as narrow as possible to avoid another TTIP-like backlash. EU-US trade relations are not a complete standstill however. There might be a small overlap between the two interests which could turn into a small trade deal that Trump can spin as a win for the US. But reaching that would need very nuanced diplomatic skills, which we have not often seen from Donald Trump so far.
Photo via the European Commission.