EU – US face off over opening up the EU’s Single Market to US agriculture

Formal EU-US trade talks begin in February but the two trade delegations met on Tuesday to firm up the bloc’s parameters for talks; Brussels focused on taking agriculture off the negotiating agenda.

Opening the Single Market to US agricultural goods is a non-starter for a number of EU member states, despite the insistence of successive US administrations.

“We have been very clear that from the EU side that we will not discuss agriculture,” Trade Commissioner Cecilia Malmström told the press last week. The statement was in direct opposition to 17-page paper submitted by U.S. Trade Representative Robert Lighthizer, defining the US objective as “comprehensive market access for U.S. agricultural goods in the EU by reducing or eliminating tariffs.”

If Washington were to insist on agricultural concessions, negotiations could falter as they did during talks on the foiled Transatlantic Trade and Investment Partnerships talks pushed by the Obama Administration.

As always, there are differences between the two sides, not least European objections to genetically modified food and chlorinated chicken. US trade negotiators also have little patience for European geographic indicators for dairy products. In any event, both the US and the European farming sectors are heavily subsidized, an issue that is politically challenging to address either in Washington or in Brussels without spending considerable political capital.

US legislators have made it clear that access to Europe’s agricultural market is a precondition to a Free Trade Agreement. The stakes are high, as the Trump Administration is threatening Europe with auto-industry tariffs, citing “national security” risks. If tariffs go ahead, they would be a great blow to the German €36bn market share of the US market.

France is usually the champion of the agricultural cause in the EU. However, opening the agricultural would be a blow to a number of EU member states, from Poland and Italy to Ireland and Romania. As late as September 2018, the Italian government was threatening not to ratify the EU-Canada Free Trade Agreement (CETA), arguing that its agricultural products were not sufficiently protected.

Following the visit by the President of the European Commission Jean-Claude Juncker to Washington in July, the EU doubled the volume of US soybean imports, cushioning the effect of the Sino-American trade war. For the moment, talks are not expected to make any more progress on the agricultural front.

For the EU, the focus is on non-tariff barriers, namely the mutual recognition of testing, inspection and certification of manufactured goods, ranging from electrical equipment to toys. The US is seeking greater access to government procurement while preserving the “Buy American” limits in the U.S., the Wall Street Journal reports.