Time is running out for the United States to resolve pending trade negotiations with the European Union (EU) over retaliatory tariffs associated with the Boeing-Airbus dispute. US Trade Representative Katherine Tai recently pledged to resolve the issue, but the US has until July to conclude or extend negotiations or raise tariffs. Failure to do so has enormous implications not only for the parties directly involved, but also for the food and agriculture actors who have been caught in the crossfire in this international dispute.
Despite broad support for resetting and stabilizing transatlantic trade relations, the EU continues to work below the surface to keep the trade imbalance as stacked as possible, which has a significant impact on food and agricultural trade.
There is no denying American tastes for European imports of food and drink products. Whether it’s spirits or cheeses, American consumers have been shown to pay a high price for European products, spending $ 15.8 billion on food and agricultural imports in 2019 and $ 28.8 billion. in 2018 before the start of the tariff dispute. Meanwhile, European rules are so overbearing and bureaucratic that the United States has consistently exported only around $ 10 billion worth of food and agricultural products to the EU per year – a large sum but hardly comparable to food exports and booming agriculture from the EU to the US without retaliation in force.
The European Commission relies on many tools to control its imports, in particular imports of dairy products. Geographical Indications (GI) policies target cheese imports, their skimmed milk powder (SMP) intervention program creates stocks that make SMP imports uncompetitive, and the list goes on. The most recent tool used to maintain the trade imbalance, even throughout the Boeing and Airbus negotiations, appears to be its import certificates.
Already known for some of the world’s longest and most technically complicated food and agricultural import certificates, the EU has now decided to treat the US and other countries as high risk to health. animal, although we have minimal animal disease. This means that the European Commission will now require several additional assurances for imports of dairy products, such as veterinary surveillance and tracking the location of individual dairy cows before milking. These types of requirements far exceed the recommendations of the World Organization for Animal Health, and neither U.S. dairy farmers nor U.S. government officials are in a position to meet the heightened requirements any time soon.
Arguing over cheese and milk sales may seem trivial, but the supply chains for these products are complex, intertwined and global. And while the European Commission wants to restrict imports of dairy products to further protect its producers against external products, the ripple effects of these requirements involve a wide range of US exports – ranging from processed products containing dairy ingredients to products. transshipped. via the EU, to US military shipments to US military bases in the EU, and to any other ingredients of US animal origin that are processed in other countries before being exported to the EU. There are even circumstances in which the United States is known to be the sole global supplier of certain ingredients used in European processing, which will be cut if the certificate requirements go ahead.
While the European Commission indifferently revises its certificate requirements to levels far beyond what international standards bodies advise, it may not realize or care about the significant economic damage it inflicts. to itself and to global trading partners. Some conservative estimates point to at least half a billion dollars in affected products, many of which are even produced in the EU with US inputs. This is just a glimpse of the damage done, as these estimates come from the new EU dairy requirements.
It’s time to see a real reset in transatlantic trade relations – one that is not just a facade for another European trade barrier that is hurting European and American producers. Food and agricultural products may not have been part of the origin of the Boeing and Airbus dispute, but we are part of it now.
The US government and the European Commission must show their food and agriculture stakeholders, who have been battered by this dispute, their determination to truly reset the relationship across all sectors. And while there is still a long way to go to truly reset the relationship from an American dairy perspective, the most urgent and easiest way to start the process is to unite the two governments to resolve the issues. import certificates at the highest level before finalizing the current retaliatory tariffs of Boeing and Airbus. in July.
It is time to ensure that the EU negotiates in good faith. Both parties need to take a more coordinated, strategic and thoughtful approach to the interdependence of the global dairy supply chain that clearly already exists for many stakeholders. Without this critical adjustment, American and European dairy users will not see a reset in transatlantic trade relations thanks to the lifting of reprisals from Boeing and Airbus. Instead, they will see US dairy exports to the EU flat, while the down-chain impact reverberates disastrously across the EU and around the world for years to come. .
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Becky Rasdall is Vice President, Trade Policy and International Affairs at the International Dairy Foods Association.