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  HOME | Business & Economy (Click here for more)

Food Trade Stumps United States, European Union

BRUSSELS – United States and European trade negotiators face growing domestic pressure over agriculture, with clashing demands threatening to rekindle a tit-for-tat economic war.

The food fight comes as US farm lobbies, Congress and some Trump administration officials demand access to European markets following a trans-Atlantic trade truce in July.

European Union officials are refusing to engage, arguing the White House agreement specifically omitted agriculture and focused instead on slashing tariffs on industrial goods.

US Trade Representative Robert Lighthizer and EU Trade Commissioner Cecilia Malmström will meet in Washington on Wednesday for their fifth round of talks, now under pressure to avoid a fight over agriculture that neither appears to want.

“It’s hard to see how you bridge the gap,” said Stephen Adams, a former EU trade official now with advisory firm Global Counsel.

If Lighthizer faces political pressure to demand quick EU concessions on agriculture, “then the EU has fairly limited room for maneuver.”

President Donald Trump, who has attacked EU farm policies and agricultural tariffs, faces a mid-May deadline to decide whether to impose duties on US car and auto-parts imports.

That could hit $60 billion in annual EU exports and would trigger immediate retaliation from Brussels, officials have said.

The deadline coincides with elections in May for the EU parliament. European politicians, eyeing the polls, are promising to protect farmers in trade talks.

“European agriculture is a valuable asset that we must preserve at all cost,” French President Emmanuel Macron said on Feb. 23. “No trade agreement can allow products that don’t meet European standards – environmental, health and social standards. This is our red line.”

The US and EU officials have worked to reduce trade tensions and bolster commercial links after Trump last year imposed steel and aluminum tariffs that prompted EU counter-duties on American goods.

But many US politicians, led by Senate Finance Committee Chairman Chuck Grassley (R., Iowa), say Congress won’t accept a deal without agriculture.

Washington is frustrated by the EU’s “recalcitrant” response to US complaints over market access for American produce, Agriculture Secretary Sonny Perdue said on Feb. 21.

During the July meeting the US was “very firm” that trade talks would include agriculture, while the EU side has adamantly opposed inclusion, he added.

“That’s a challenge,” Perdue said. “The president is prepared to use whatever leverage he may have.”

The White House approach to the EU echoes administration tactics against China, in which Trump threatened levies to force Beijing into negotiations.

After meeting Austrian Chancellor Sebastian Kurz on Feb. 20, t he president reiterated the option of car duties.

“If we don’t make a deal, we’ll do the tariffs,” Trump said.

Trump has repeatedly criticized the US trade deficit with the EU, which widened to a record in 2018, and attacked German car exports.

He also targeted tariffs on US wine as unfair, singling out France, and privately complained that European subsidies disadvantage the US.

Under the Trump administration, the Commerce Department targeted EU support for Spanish olives, challenging agricultural assistance programs protected under World Trade Organization rules. Washington also threatened to impose tariffs unless the EU doubles the size of its quota for non-hormone-treated beef exports. Talks on the issue are ongoing, and EU officials said the issue could be resolved in coming weeks.

The trade duel highlights farmers’ political clout in both economies. Agriculture accounts for about 5 percent of $1.1 trillion in annual EU-US trade in goods and services, but it has repeatedly damaged trans-Atlantic relations.

Washington and Brussels’ most ambitious effort to tighten economic ties, the Transatlantic Trade and Investment Partnership, collapsed in 2016 partially over EU resistance against US produce.

To avoid a similar fate, EU negotiators have said that in return for the US dropping demands on agriculture, Brussels would drop demands that the US open public-procurement tenders, which would enable European companies to compete for federal- and state-government contracts.

Yet the USTR on Jan. 11 listed “securing comprehensive market access” for agricultural goods as a primary objective of EU trade negotiations.

The EU responded a week later with a trade talks wish-list “strictly focused” on industrial goods, including autos but excluding agricultural products.

“Agricultural issues are always the hardest and most sensitive topics in a trade negotiation and can quickly poison talks,” said John Clancy, a former EU trade spokesman now with FTI Consulting.

Still, clinching a framework may offer the opening needed for what Trump and European Commission President Jean-Claude Juncker promised in July: swift trade deals.

It could also satisfy a top White House demand, cutting the US trade deficit with Europe.

A pact on industrial goods, by EU estimates, would boost American exports to the bloc by 13 percent compared with a 10 percent rise in imports.

“It’s a limited agreement that we could, hopefully, deliver quite quickly,” Malmström said on Feb. 22, suggesting a deal before year-end.

Starting talks could also provide wiggle room to negotiators navigating domestic political currents, notching up wins while sidelining contentious discussions, including on agriculture.

“We may seek to pursue negotiations with the EU in stages,” the USTR said in its negotiating objectives.

“We are committed to concluding these negotiations with timely and substantive results for US consumers, businesses, farmers, ranchers, and workers.”

 

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