Chlorine-washed poultry, hormone-fed cattle and genetically modified foods–everyday products in the US— are nowhere to be found in Europe. These cultural differences could torpedo negotiations over an agreement that would expedite trade.
President Obama proposed in his State of the Union address in February to open negotiations over a free-trade agreement with Europe. He believes that Europe is hungrier for better access as it sees this pact as an opportunity for growth in the middle of a deep economic crisis.
Signing the agreement would give the United States access to 500 million consumers in Europe and it could represent for both a boost of 0.5 to 1 percent every year. The trade between the EU and the US accounts for almost half of the world’s GDP, and this deal could establish a strong enough common market to compete with China’s fast growing economy. Annually, US-EU trade totals $650 billion in goods and services, about 40 percent of global commerce.
However, agriculture is sure to be the point of contention between the United States and the European Union, when the free trade deal negotiations begin. Policy makers will find it hard to reach a compromise without serious hurdles.
“In agriculture, certain interests will be squashed as these are broad policy changes,” said Joseph Greco, managing director of Meridian Equity Partners.
A free-trade deal is an engine of growth for sectors like manufacturing, pharmaceuticals and auto parts. But, in the United States, agriculture has some serious concerns about the terms and conditions.
European food safety regulations are stricter and there is some concern that American products won’t be able to be commercialized if there isn’t a change in policy. Europeans are not willing to give in on their strict food safety restrictions.
The differences can lead to months, if not years, of contentious negotiations.
In addition, in Europe, farms are highly subsidized and European farmers are afraid they’ll receive less money if a free trade deal is signed with the United States.
The American Soybean Association, representing more than 21,000 soybean farmers, says it wants any agreement to allow the export of genetically modified corn and soy to Europe and to replace any product descriptions like “parmesan” and “champagne,” used for products produced in the United States.
“We are simply seeking ways to ensure market access to the US,” said Matt O’Mara, from the Biotechnology Industry Organization, an industry advocacy group that includes members like Monsanto and DuPont.
The US Poultry and Egg Association wants Europe to allow treatments for poultry, such as washing chicken in chlorine. The United States hasn’t exported poultry to Europe since 1997. The poultry producers said they expect, if the negotiations are successfully concluded, to sell more than $500 million in products in the EU a year.
The National Pork Producers Council is also concerned that an agreement won’t allow them to export their products.
But Nick Giordano, the council’s Vice-President for international affairs, is very optimistic about the success of the trade deal negotiations.
“This needs to be an ambitious and comprehensive agreement,” he said. “There are always bumps on the road. Some sectors can have reservations but we should keep our eyes on the goal. I’ve been in the middle of all free-trade agreements going back to the Clinton administration and I know these issues can be resolved.”
Analysts believe it is possible to reach a trade deal that leaves out the agriculture sector.
“They could just table that for another time,” said Adam Hersh, economist at the center for American progress. “Maybe a narrower scope of agreement will be reached.”
Some economists stress the benefits of free trade and its effects on the economy.
“Generally free-trade is very good for the economy as a whole, but unfortunately it does not affect everybody equally,” said Miles Kimball, economics professor at the University of Michigan. “Europe is very protective of its agriculture sector.”
Dean Baker on the US-EU FTA negotiations