The U.S. and the EU have completed four rounds of negotiations on a Transatlantic Trade and Investment Partnership (TTIP) free trade agreement (FTA). Sanitary and phytosanitary issues for agricultural products are key topics. A recent report from the EU Commission to the European Council, Trade and Investment Barriers Report 2014, highlights how the EU views some of these SPS issues.
The report addresses all barriers to trade, not just agricultural ones, for what the EU considers its strategic partners – China, India, Japan, Mercosur (Brazil and Argentina), Russia and the U.S. The EU list of successful actions in 2013 for the U.S. included expanding the list of EU countries or regions considered free of Classical Swine Fever, Avian Influenza, Newcastle disease, and partially Swine Vesicular disease. A final rule on BSE and beef was published after several years of discussion. The EU expects that exports of beef will resume shortly.
Animal disease assessments are still pending for some EU countries that have the same disease status in accordance with EU harmonized legislation. Rather than treating countries individually, the report argues the U.S. should recognize the fact that the EU is a single entity and single market. The EU countries have adopted similar animal health management decisions and follow existing provisions of international standards bodies such as the OIE (Office International des Epizooties) for animal health.
The EU also claims that applications for exporting to the U.S of products of animal origin face long delays for Grade A dairy products and small ruminant products. The EU is also concerned by the delays in treating other SPS export applications submitted for apples, pears, stone fruit and bell peppers. These issues were also raised in the 2012 report.
This report is part of the EU’s Market Access Strategy for identifying key barriers to trade and setting negotiating priorities. This program has indentified 220 barriers in 32 countries. The Commission also compiles reports on potential trade-restrictive government policies. From May 2012 to May 2013 the G20 countries had initiated 154 new measures and had removed only 18. The total number of potentially trade-restrictive policies had grown to 688 since the tally began in October 2008.
The U.S. had only nine of the 688 potentially trade-restrictive policies. Three of those were border measures, two behind the border measures, two public procurement policies (buy American), one service and investment barrier and one program to stimulate exports. The U.S. was infrequently mentioned in the latest report released in September of last year. Buy American legislation and importing food under provisions of the Food Safety Modernization Act were listed as potential problems.
The latest Commission report on potential trade-restrictive government policies concluded that emerging economies led by Argentina, Brazil, India, Indonesia, Russia, China, South Africa and Ukraine continued to apply the highest number of potentially trade-restrictive measures. It went on to explain, “Economic growth, the development of efficient value chains, and export activities are intrinsically dependent on imports, so developing countries should have a real interest in avoiding and combating impediments to trade.” If the U.S. and the EU could reconcile their differences on trade policies, they could work together on barriers to trade in other countries.
That is particularly true for trade with Russia. The 2014 barriers report devotes over a page to a section titled Russia, one year after its WTO accession. The EU is concerned like the U.S. that barriers continue to limit access to Russian markets. The first sentence of the paragraph on SPS issues could have been written by a trade official from the U.S., “In the field of SPS measures, non-transparent, discriminatory, and disproportionate control and approval procedures, excessively stringent requirements on antibiotic residues, microbiological criteria and pesticide residues’ insufficient alignment with the WTO SPS Agreement and other international standards and practices are the source of many difficulties.”
The EU has a clear-headed view of how the TTIP could change trade rules for the better. “A far-reaching and ambitious TTIP Agreement which includes strong disciplines on regulatory cooperation and regulatory coherence could help reduce non-tariff barriers which EU companies are still facing in the US. It could also set global standards in many areas and encourage a number of third countries to follow suit, to the benefit of the EU exporting industry.” At the recently completed EU-U.S. summit, the two governments committed to a TTIP that increases regulatory compatibility and “formulating joint approaches to rules that address global trade challenges of common concern.”
Despite all the barriers to EU’s agricultural exports, its agricultural trade balance has shifted from a deficit of more than €3 billion in 2000 (about $4.0 billion at today’s exchange rates ) to a surplus of about €7 billion in 2011 ($9.5 billion). The 2013 barriers report noted that 90 percent of global economic growth is expected to be generated outside the EU by 2015. In addition, interdependent regional and global supply chains require the EU to confirm its prominent role as a key value-provider on a global scale. These words apply equally to the U.S.
Moving ahead with negotiations on SPS issues will not be easy. The U.S. has raised for years issues like the use of pathogen reduction treatments for meat carcasses, crop biotechnology and use of growth promoting hormones in beef production. Resolving them, or putting in place a policy framework for resolving them, will not be easy. Getting past these and other issues will allow both governments to move ahead and face trade barriers that are holding market growth for both economies in developed and developing countries. If this chance is allowed to slip away, another opportunity may not arise until a post-Doha era of WTO talks.