How the world’s biggest free-trade deal will affect farmers
©ING/Rex
The livelihood of farmers across Europe will be high on the agenda in two months’ time when officials from the EU and US meet to negotiate what is likely to be the world’s biggest free-trade deal ever struck between two economies.
If agreed, the Transatlantic Trade and Investment Partnership (TTIP) will represent 45% of the world’s GDP and cover 12% of its population. According to some estimates, it will be worth £100bn/year to the EU.
See also: £100bn trade deal: How much will farming get?
Every sector is up for negotiation, from telecoms to insurance – but disagreements over farming threaten to derail the whole deal.
Why the controversy over agriculture?
Many UK and European farming organisations have voiced concern about the impact of TTIP on vulnerable farming sectors – particularly beef, pork and poultry – where the US is much more price-competitive.
In general, the US has less stringent regulations governing agriculture. Its farmers can use products banned in the EU and its welfare and environmental standards are lower, while US producers also, in general, have the advantage of cheaper labour and land.
What the deal would mean for different industry sectors
At the moment, many US agricultural goods are not allowed into the EU – including hormone-treated beef, poultrymeat washed in a chlorinated solution and pork and eggs that do not meet the EU’s welfare regulations.
A truly free-trade deal, however, would do away with barriers like trade tariffs that currently protect many EU farmers from more price-competitive imports. Such an agreement would also allow the free movement of goods regardless of the different standards – and therefore costs – they had been produced to.
All of this depends on what deal is actually struck. If US negotiators agree to treat vulnerable EU farming sectors as sensitive, then there could still be barriers in place to give some protection against cheaper imports.
The EU’s own policy department has said that a deal which does not recognise the differences in EU and US farming could seriously damage those sectors.
The big TTIP negotiations are going to be on standards
Many things make European and US farming different – climate, topography, scale and resources. But we value different things too.
The European food and farming system is regarded as having some of the highest quality, welfare and safety standards in the world – while the American system favours producing large quantities cheaply.
The EU’s precautionary principle may create additional paperwork, costs, constant checks and red tape, but the end product is something to be hugely proud of.
Our farming is trusted and cherished by its citizens and is one of the reasons Europeans are prepared to support farmers through the CAP.
The EU has said our food legislation is not up for negotiation – but if negotiators give in, there is a worry we could see a race to the bottom.
Yet the EU’s own study into TTIP warns that the fabric of rural life and the livelihood of many of its farmers may hang in the balance if this happens.
We could lose one of our key selling points – just as the rising middle classes in Asia are seeking out our trusted food.
Worse still, we could lose the confidence of European consumers.
TTIP could bring much-needed opportunities, but there is a lot at stake. Agriculture must not be used as a bargaining chip and sacrificed for the benefit of other industries.
We need a deal that reflects our differing cost base and production standards – not one that forces us to try and beat the US at its own game.
Winner and losers
The EU’s beef, poultry and pork sectors are widely thought to be the most vulnerable to the impacts of TTIP, with little hope of exporting in large quantities.
The suckler cow herd is especially at risk, warns a report from the European Parliament’s policy department, because of its heavy reliance on the dairy sector, where demand is relatively inelastic.
Not only is the US more price-competitive in these areas, but it has the ability to expand its production rapidly – particularly in beef and pork – and into a market which has so far been heavily restricted.
The beef sector, for example, could face competition from up to 1m tonnes of US beef if the EU did away with import barriers, warns an EU report.
Dairy, on the other hand, could be one of the biggest farming winners from TTIP.
The US currently restricts imports through high tariffs, onerous administrative barriers and differing standards, but TTIP could help reduce these barriers and give European dairy products a cost advantage over competitors such as New Zealand.
Those supplying speciality products, such as Parma ham, cheeses and salamis, are also most likely to gain from TTIP.
This could be further boosted if the US were to recognise products with protected geographical indications.
However, countries such as France, Italy and Spain will probably have most to gain from increased exports of speciality products.
Red lines
TTIP negotiators on both sides have talked about the need to harmonise standards. While this could reduce red tape for accessing the US market, critics have warned that this risks a lowering of EU standards.
Not only could this open up the market to competition from cheaper, lower-standard products, but some, such as the British Poultry Council, have warned that it could jeopardise consumers’ trust in European farming, which is widely regarded as having the highest standards in the world.
With rapidly expanding middle classes in other parts of the world increasingly demanding high-quality produce, there is concern that the EU could lose its biggest competitive advantage.
EU negotiators – and Defra – have stressed that the EU’s food safety legislation is not up for negotiation and have set out “red lines” that will not be crossed in the deal.
These include hormone-treated beef and chlorinated chicken, which will continue to be banned in the EU, while GM products will continue to be marketed only once they have been authorised.
Negotiations resume in July, but until a deal is struck there is no knowing what European farmers will face – or what opportunities will arise.
| Suckler cow trade in key goods between the US and the UK | ||
| Exports to US (tonnes) | Imports from US (tonnes) | |
| Beef | 290 | 0 |
| Pork | 3,267 | 824 |
| Sheep meat | 14 | 0 |
| Dairy | 6,740 | 3,560 |
| Poultry meat | 258 | 25 |
| Source: Defra, 2014 data | ||
We must keep our high standards, says poultry farmer
©Marcelo Biglia
Ronan Byrne produces about 300 chickens a week, plus turkeys, geese and has 45 beef cattle on his 14ha farm near Galway in western Ireland.
He recently presented his views on TTIP to MEPs in Brussels at a meeting organised by the European Environment Bureau, a federation of European environmental groups. He has a Masters degree in European regulation.
Mr Byrne says the EU produces the best quality food in the world and commands the price to match. But he worries that TTIP will cause a race to the bottom, when the EU’s high standards are an advantage internationally.
“Regulations may be a pain, but they’re there for a reason,” he says. “Prevention is better than cure in everything in life – particularly in farming.”
“It can be frustrating at times with lots of paperwork – but it gives confidence in the EU food system.”
He says, for poultry at least, he sees little advantage from TTIP and we should instead be focusing on eating more EU food within Europe.