The EU has given permission to resume trade talks with the US. Relations have been somewhat frayed over the past week, but we might not even get to the negotiating table if US agriculture isn’t included in the discussions.
Ag to be Excluded From Trade Talks
Diego Flammi of Farms.com says that the European Union (EU) has voted to exclude agriculture from trade talks with the United States. In a statement, the EU said,
Any trade agreement between the two partners will be “strictly focused on industrial goods, excluding agricultural products.”
This development has led to retaliatory threats from President Donald Trump. He says the US will levy tariffs on key European products if US Ag isn’t part of the trade negotiations. The US happens to be a large market for European cars.
“Look, if (the trade situation) doesn’t change, we’re going to tariff all of (the EU’s) cars and everything else that comes in,” the president said yesterday during a visit in Burnsville, Minn. “You can’t treat our farmers that way. You can’t treat our people that way.”
The American Soybean Association (ASA) is especially displeased with this possibility. It was only last January that the EU announced that they would allow US soybeans could be used in biofuel production there. ASA President Davie Stephens sees this as a step in the wrong direction.
“We had high hopes that some of the longstanding concerns regarding the EU’s policies on agricultural biotechnology and on revisiting the EU’s pesticide laws would be addressed,” he said in a statement Tuesday. “With the EU now formally excluding, it will be difficult if not impossible to address these non-tariff barriers that severely inhibit trade between our countries.”
Iowa Senator Charles Grassley predicts that any trade agreement between the US and EU has a slim chance of passing without including agriculture in the negotiations. Though he did say that eliminating tariffs on US industrial goods was a good starting point.
“Any deal that eliminates tariffs will need to get congressional approval,” he said in a statement Monday. “Bipartisan members of the Senate and the House of Representatives have voiced their objections to a deal without agriculture, making it unlikely that any such deal would pass Congress.”
DTNPF’s Washington Insider also reported on the trade talks between the EU and US. The two countries are hoping to smooth things over from last week’s back-and-forth tariff threats that stemmed back to an aviation dispute from fourteen years ago.
EU trade ministers have agreed to eliminate tariffs on industrial goods, which is part of a commitment that president Donald Trump and European Commission President Jean-Claude Juncker agreed to last summer. EU trade chief Cecilia Malmstrom wants an agreement by September.
The removal of transatlantic tariffs on industrial goods would expand U.S. exports to the EU by 13% and the bloc’s shipments to the American market by 10%, the commission said in January. The average tariff on non-farm products is 4.2% in the EU and 3.1% in the U.S., according to Brussels.
The EU has been clear that agriculture would not be included as part of the trade discussions. As long as the current metal tariffs are in place, they say they’re leaving US Ag off the table and are willing to suspend negotiations if the US imposes additional trade restrictions.
“We are ready to move onto the next phase of EU-U.S. relations,” Malmstrom told reporters in Brussels on Monday, adding that she would reach out to her U.S. counterpart immediately to set a date for talks. “I am convinced that breaking down barriers to trade between us can be win-win.”
EU National Security Threat?
Like the controversial steel and aluminum tariffs that Trump levied in the name of national security, the car-tariffs have been threatened for similar reasoning. The EU obviously is somewhat taken aback that they might be considered a threat.
“We aren’t enemies of the economy here, we aren’t threatening the economy here, we are the closest friends,” European Commissioner of Economic Affairs Pierre Moscovici told Bloomberg last week in Washington. “Let’s cool down, let’s not talk about any trade war between us, but in case, we need to be prepared.”
“The talks are a great opportunity, because we will be sitting down at the table for technical discussions with a country that has lately been more interested in confrontation than in free trade,” Holger Bingmann, president of Germany’s BGA exporters’ association, said Monday.
On the other side, the US has felt that the EU has not been acting in good faith and has delayed the start of trade talks. Some Ag groups have criticized the Trump administration’s trade policies. Long-established markets are in jeopardy. It may prove difficult to bring agriculture back into the discussion with the metal tariffs remaining in place.
According to Ken Anderson of Brownfield Ag News, the American Soybean Association (ASA) has expressed disappointment that the trade negotiations with the EU will not include agriculture. Minnesota farmer and ASA vice president Bill Gordon said,
“There’s a lot of protectionism there and other different tariff things that they’re using to keep U.S. agriculture out,” Gordon says. “That conversation about U.S. Ag needs to be on the table and I think our administration agrees. So it will be interesting to see what happens.”
EU policies on biotechnology, gene editing and pesticide regulation have been barriers for trade.
“When you talk to the producers on the ground in those different European countries, they want the technology that we’re using to better their production. And yet society over there is using more emotion than they are using science to base those facts.”
The ASA is hoping the Trump administration will be able to address these concerns.
US producers should be watching these negotiations closely. Things may intensify before they get better as each side ratchets up the tariff threats.