TTIP and agriculture
The Transatlantic Trade and Investment Partnership (TTIP) is one of the most controversial and emotive agreements in the entire history of the EU, and has a significant impact on its relationship with the United States. Partly because of the secrecy in the negotiations and partly because of the fact that it has touched upon unexplored ground, this trade agreement has sparked rows across EU trade unions, industries and consumers. But why has such an initiative, which, according to the European Commission, will boost the EU’s economy by €120 billion, the US economy by €90 billion and the rest of the world by €100 billion, become such an issue for EU farmers in particular?
The American Dream
Perhaps the most basic argument holds that TTIP would favour US agriculture over Europe. The comparative advantage of the American production line, in combination with perceived lower standards, makes it easier and cheaper for products to eventually end up in the hands of consumers. A study published by German association ‘UnternehmensGrün’ shows that no country has the capacity to produce products like cereal as cheaply as the USA, due to a variety of factors including the use of genetic engineering at a local level and larger production areas.
The GMO Argument
Health is also a major cause of concern for EU farmers and consumers when it comes to TTIP. The debate on Genetically Modified Organisms (GMOs) in animal feed has been particularly extensive, and in the US, as opposed to the EU, GMOs are generally considered safe and are therefore widely produced and cheaply distributed. As a result, GMO-free farmers fear being forced to feed animals with GMO products, due to the price advantage of the latter. Farmers that resist the ‘temptation’ of cheap production might face the danger of being pushed out of the market, while national legislation banning the use of GMOs will either be scrapped or further delay the agreement.
Quantity over Quality
Arguably, SMEs are the backbone of the EU economy and this includes the agricultural industry. In the US however, this is not the case, and widespread mass production is adding to a comparative advantage. It is indeed possible that the EU ban on growth hormones would exclude the majority of US produced products from the deal.
The Argument in Favour
Setting aside the arguments against TTIP, its proponents suggest that the agreement will liberalise one third of global trade. The removal of trade barriers would potentially allow EU farmers to export high-value products that are widely produced within Europe, namely cheese, wine, olive oil, spirits and chocolate. Current tariffs of up to 30% make these products difficult to afford for the average American. The Commission claims that tariffs on products that are circulated in the US market for particularly low prices, namely animal feed and maize, could be altogether scrapped altogether, allowing EU farmers to buy them in lower prices.
The State of Play
The 14th round of negotiations concluded on the 15th of July in Brussels, with the chapter on agriculture not progressing to the advanced stage of consolidation. Once (or if) the bilateral negotiations come to an end, EU governments, along with the European Parliament, will be called on to approve or reject the agreement. Having secured the double democratic guarantee, the agreement will finally be signed.
What remains to be seen is whether, in the midst of a dairy crisis, a fraught EU - Russia relationship and the ongoing complexities of the Common Agricultural Policy (CAP), TTIP will be a breath of fresh air for EU farmers, or a death knell.
Anna Krouskou is an EU Policy Analyst at DeHavilland EU. A graduate of the University of Athens and the London School of Economics and Political Science, she has previous experience working at Ketchum and the EU Council.