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EU Ag Reluctant on Trade Deal
Tuesday, January 22, 2019 8:48AM CST
By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- Representatives for European agriculture insist Europe will be open to more agricultural products from the U.S. even as the European Union has omitted agriculture from its priority items in negotiating a cross-Atlantic trade deal.

Agricultural representatives from the EU spoke earlier this week at the American Farm Bureau Federation annual meeting in New Orleans.

European Union officials and the Trump Administration are starting trade talks, but they already have different views on how to treat agriculture. The U.S. Trade Representative's Office last week included language on agriculture to "secure comprehensive market access for U.S. agricultural goods in the EU, reducing or eliminating tariffs" as well as "establish specific commitments for trade in products developed through agricultural biotechnologies."

The USTR statement came just a couple of days after European Union Trade Commissioner Cecilia Malstrom said agriculture wasn't on the table. "We have made it very clear from the EU side that we will not discuss agriculture," Reuters quoted Malstrom after she met last week with USTR Robert Lighthizer.

Senate Finance Committee Chairman Charles Grassley, R-Iowa, also told Malstrom last week that a trade deal won't get through the U.S. Senate if agriculture isn't included. "I don't know how anybody in Europe that wants a free trade agreement with us can expect it to get through the U.S. Senate if you don't want to negotiate agriculture," Grassley said last week.

Jesus Zorrilla, Counselor on Agriculture with the EU, said at the Farm Bureau forum that agricultural products were excluded from the talks to streamline the focus on industrial products and autos.

"It's not exactly that she (Malstrom) doesn't want agriculture," Zorrilla said. "Agriculture is not included, because we are already discussing rules and food-safety standards, which have been very much our problem with trade and agriculture."

The U.S-EU trade relationship is worth more than $672 billion in 2018, but the U.S. also had a $139 billion trade deficit, according to U.S. Census data. In agriculture, the U.S. trade deficit ran about $9 billion in 2016, the last year of readily available numbers, according to the U.S. Trade Representative's Office.

Europe ships a lot of wine and beer to the U.S., as well as oils, snack foods, vegetable oils and processed fruits and vegetables. In return, the U.S. ships a lot of tree nuts, soybeans, wine and beer and prepared foods to Europe.

"This perception that the U.S. is a closed market to the EU is incorrect," said Lorenzo Terzi, counselor on food safety for the European Union. "We are a huge market of 500 million people that is a big importer of food."

Soybean sales to Europe rose last year after summer talks between President Donald Trump and EU officials. Europe bought 5.7 million metric tons (mmt) of soybeans in the last marketing year ending Aug. 31, 2018. The last reported data before the government shutdown showed the EU buying 4.3 mmt mid-December, which is three times the volume the EU had purchased compared to the same time the year before.

"Due to the recent movement in the world markets, we have increased purchase of U.S. soybeans, and now the U.S. is the major provider of soybeans to the EU," said Sylvain Maestracci, agriculture counselor for the French Embassy in Washington.

Terzi said the EU will buy more soybeans from the U.S. in future years because of the EU biodiesel law. "So we might see some increase in our imports," he said.

Terzi added though, that EU trade is consumer-driven and Europeans are particular about certain products, especially when it comes to biotechnology. "We cannot force a customer to buy a product he does not want," Terzi said.

Zorrilla acknowledged his doubts about a final EU-U.S. trade deal, adding that the big concern right now is trust, because of the steel and aluminum tariffs placed on Europe by the Trump Administration, and Trump's threats to impose tariffs on autos as well. "I'm not very optimistic, to be frank," Zorrilla said. "I think the perception from Europe is surprise on unpredictability. We were very surprised to be a target of national security from the U.S. We were hit on steel and now we are told we might be hit on cars."

Zorrilla added the general framework of the talks is not very positive. If the only goal is to address the trade deficit, the EU will not take that approach in a trade deal. "I think it would be difficult," he said.

Zorrilla also added European officials would be happy to talk about "geographical indicators," which are food descriptions that Europe often restricts to certain countries or regions. EU officials have been effective in trade talks getting GI restrictions on other products that may taste the same, but do not come from those food descriptions that Europe often restricts to certain countries or regions.

"We would be willing to discuss geographical indicators, but I don't think we are going the same direction as the dairy people here," Zorrilla said.

EU agricultural officials also were asked what Brexit would do to food trade and agriculture in Europe. "We don't want to think about that," Zorrilla said, adding "Brexit is a divorce and divorces are generally messy."

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN


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