From Inside Trade

U.S. Agriculture Secretary Tom Vilsack and his European Union counterpart Phil Hogan this week both warned that the Transatlantic Trade and Investment Partnership (TTIP) will not get sufficient support from their farm lobbies if it fails to resolve thorny differences over geographical food names, biotechnology and antimicrobial washes for poultry and meat.

“The agricultural interests in the United States are not politically powerful enough, in my view, to get an agreement passed. But they are certainly powerful enough to stop an agreement that’s been negotiated,” Vilsack said at a Dec. 1 press conference in Brussels on the sidelines of the EU Agricultural Outlook Conference.

“Which is another way of saying that if we don’t address these thorny, difficult, tricky issues … [and] decide not to deal with them because they’re too hard, then in my estimation you’re not going to have a TTIP agreement,” he added.

“So it does require creative problem solvers to figure out a way to deal with the [geographical indications] issue, to deal with [genetically modified organisms], to deal with pathogen reduction treatments — all of the sticky issues that we have. Which is why it’s hard,” the secretary said.

At the same time, Vilsack in the Dec. 1 press conference signaled confidence that the U.S. and EU could ultimately find solutions by pointing to the fact that the U.S. had successfully resolved other tricky challenges as part of the negotiations for a Trans-Pacific Partnership (TPP) deal.

His mention of pathogen reduction treatments was a reference to a disagreement between the U.S. and EU on whether it is safe to use chlorinated water to wash away pathogens like E. coli on poultry.

In his opening comments to the Outlook Conference, Vilsack also mentioned EU barriers to U.S. beef exports, the bulk of which are effectively blocked by an EU ban on the use of artificial growth hormones and the use of the animal drug ractopamine to promote the growth of lean meat.

Hogan, the European Commissioner for Agriculture, in his opening remarks at the conference, largely delivered the same message, emphasizing that greater protection for GIs and increased market access for European dairy products are key to a balanced deal that will find support in the EU.

“To achieve that balance and to get the weight of the farm groups, member states and the European Parliament behind the agreement, Europe will need some gains too,” he added. “And we’ll need real access for our dairy sector which faces tariff peaks and sanitary barriers. In addition, we need additional protection of our GIs, including wine terms.”

At the same time, he acknowledged that agriculture is a tough issue for the EU since “the United States is very competitive in sectors where we have higher costs.”

Hogan concluded that he believes this is “all doable” in 2016. “But we need to — I suppose — get on with the business.” U.S. trade officials have previously made clear that they want to conclude TTIP under the Obama administration, but Vilsack did not mention this timeline.

Given the pace of the current TTIP negotiations, it is highly unlikely that a final TTIP deal can be struck next year, unless it is scaled back drastically from the scope now envisioned, some EU sources say. At this point, the European Commission has told EU private-sector representatives that it will reject a “TTIP light” approach, one source said.

But he speculated that this commission stance is unlikely to hold if the U.S. presents a deal as a “take it or leave it” proposition, and if President Obama were to successfully urge powerful EU leaders like German Chancellor Angela Merkel or UK Prime Minister David Cameron to accept what the U.S. has put on the table.

Vilsack underscored the “serious challenges” of reaching an agriculture deal to members of the European Parliament’s Agriculture & Rural Development Committee in a hearing a day earlier, according to a press release by the committee. He was on a two-day trip to Brussels ahead of a stop in Paris.

Asked about the pace of the negotiations on agricultural issues in TTIP, Vilsack noted that historically, agriculture has been a sensitive area in trade talks where deal-making is often left to the very end. “I wouldn’t be overly concerned about the pace,” Vilsack told reporters. “I think progress has been made; I think we all believe more progress needs to be made.”

Vilsack also said that the U.S. was continuing to take steps to “create momentum” in these negotiations by addressing specific barriers that have hindered EU agricultural exports to the U.S. market, such as by allowing the resumption of beef exports from Ireland, Hogan’s home country. The U.S. halted imports from EU countries in the wake of a “mad cow” disease outbreak in the mid 1990s, and only in 2013 began taking steps to reopen its market. Ireland was the first country to have beef shipments to the U.S. resume.

He also said that USDA was working internally on a rule that would reopen the U.S. market to apples and pears from European countries, which have been banned due to plant pest issues, although he offered no timeline for this process.

Hogan said the TTIP talks were making progress in the area of agriculture, although he also said he believed that the conclusion of TPP would allow the U.S. to focus more on the U.S.-EU talks.

But a senior White House official last month made clear that the Obama administration’s top trade policy priority is winning congressional approval of the TPP and getting it implemented.

Overall, Vilsack publicly drove home the point that neither side would succeed by trying to foist its own system upon the other. He said the goal should not be for the two sides to adopt identical systems, but to find ways that deliver an “equivalent” outcome.

He did not elaborate, but the secretary and U.S. officials have used the same line of argument in rejecting EU demands to grant new, special protections for food names recognized in Europe as GIs. The U.S. argues that its trademark system delivers an equivalent level of protection, although EU officials have cited a lack of administrative enforcement as one of the key shortcomings of the trademark system as compared with its own GI registry.

He also sought to reassure the EU that U.S. products would not “overwhelm” the European market, and argued that opening the EU to more U.S. agricultural goods would simply give European consumers more choice — a point he has made on many occasions before.

Hogan, for his part, argued that the EU would have to have to find a way for its producers to remain competitive in in spite of the fact that EU rules on sustainability and animal welfare impose higher costs of production.

He argued that these rules respond to the demands of EU consumers and have given them a leg up in other emerging markets like China as consumers there also look for higher quality foods, but indicated that this may present a challenge if producers are exposed to more competition from the U.S.

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