Ag hurdles an EU FTA problem

Mar 1, 2013

—Biotech and livestock hormone issues are longstanding challenges.

While the Obama administration and others see great potential in spurring more exports to Europe through a new possible free-trade agreement, U.S. agriculture will be hard-pressed to see big gains unless Europe agrees to dramatically change its regulatory mindset.

U.S. agricultural experts in European trade and policy maintain U.S. agricultural products would remain at a disadvantage in Europe unless a free trade agreement requires reforms in Europe’s regulatory trade barriers on farm products. A panel discussion touched on the problems last week at the USDA Outlook Forum.

Already in Europe there has been talk about compatibility of regulatory systems, as well as the problems with long-standing fights over biotech crops and the use of hormones in beef. European Commission President Jose Manuel Barroso has already been quoted saying, “We will not negotiate changes that we do not want of the basic rules on either side, be it on hormones or GMOs [genetically modified organisms],” last week in Brussels.

Constance Cullman, a policy expert for DowAgro- Sciences, said Europe has actually gotten worse when it comes to approving biotech crops. Actually, Cullman said the problem was not the legislative framework in Europe. The problem is politicians ignore Europe’s scientific recommendations and refuse to take action.

“Right now, we are not seeing a lot of signals we are going to have a major change in the attitude and approach,” Cullman said.

There is a backlog of 75 petitions to approve GM crops either for import or production in Europe. Of those, 58 have been cleared by scientists and recommended for approval, but held up by politics. As many as 23 petitions are seeking cultivation in Europe.

As of now, only two biotech traits have been approved for cultivation, one corn variety and an industrial potato variety. In the meantime, corn rootworm is spreading in eastern European countries.

“Europe risks becoming an innovation backwater,” Cullman said.

Still, Cullman said the free-trade agreement could be a “game changer.” It’s possible such an agreement could be the impetus for countries that want to allow import or cultivation of biotech crops, but politicians are leery of acting on their own.

“I don’t think we are going to be able to get around that topic,” Cullman said, adding the EU simply “can’t take it off the table” in talks.

In beef, the U.S. and Europe are on a hiatus when it comes to the two-decade battle over hormone treatments in U.S. cattle.

The U.S. had as much as 16 percent of Europe’s import market for beef as late as 1988, mainly in variety meats. Within five years, that market share fell to 3 percent. Litigation began in the mid-1990s by the U.S. and Canada over Europe’s hormone ban. After repeated rulings in the favor of U.S. and Canada, the EU has held its ground. The two countries agreed in 2009 to a memorandum of understanding that Europe would accept 20,000 metric tons of non-hormone-treated beef, duty free for three years, then in the fourth year of the agreement, the EU would raise the tariff-free level to 45,000 metric tons. In return, the U.S. would suspend its tariff penalties against Europe.

The only problem with the EU’s increased imports of duty-free, non-treated beef is that there was no guarantee U.S. producers would get the sales. In the first three years of the agreement, the U.S. has actually seen its percentage of that 20,000 tons decline. Australia and Uruguay are now exporting more to Europe.

The current scandal over European meat and food processors commingling horsemeat with beef products could be the game changer in the U.S. beef situation. Yet, Europeans likely will demand more traceability of beef to expand the market for U.S. cattle producers.

“We are in a disadvantage in the global market because we don’t have a traceability system,” said Thad Lively, a senior vice president of the U.S. Meat Export Federation.

Another area where U.S. farmers will likely want to see changes is Europe’s growing reliance on sustainability standards and certification for import. The soybean industry has been battling this issue regarding the EU Renewable Energy Directive. The EU requirements put U.S. soybeans at a disadvantage in crushing for biodiesel. The EU argues U.S. farms should be audited while U.S. soybean groups argue such audits only increase costs. The U.S. groups argue certifications are unnecessary and the soybean industry as a whole meets the guidelines of sustainability.

“We don’t want to have a farm-by-farm certification and we believe that would significantly increase the costs,” said Jim Sutter, CEO of the U.S. Soybean Export Council. — Chris Clayton, DTN