Hi °C | Lo °C Europeans and Americans, linked by shared cultures and centuries of history, are about to face off over some of the toughest issues that divide them: cheese, wine, foie gras and Irish beef.
Farm products will be a central part of negotiations aimed at creating a trade agreement between the US and the 27-nation EU, endorsed last week by President Barack Obama and his counterparts on this side of the Atlantic.
Both sides – whose economies collectively represent almost half the world's output – say they're ready to knock down barriers that for years have bedeviled their compatibility on trade. Few are greater than those dealing with food and agriculture, which raise thorny issues of national identity, ethnic pride and economic security.
"We've fought over bananas, we retaliate against their beef ban with Roquefort cheese," said a US source. "There has to be a more lucrative approach."
Getting to a deal that could add €150bn in annual trade between the two blocs will involve overcoming disparate views about genetically modified crops, livestock hormones, food safety and subsidies, according to analysts. Complex regulatory structures, political opposition and competing perceptions of how farming should be done may also pose barriers.
"It's hard to see American hormone-treated beef entering Europe," said one analyst close to the French Agriculture Ministry. But the potential windfall from a trade deal could keep negotiators at the table.
The value of trade and investment between the U.S. and EU is already about €3.2 trn a year. An accord would cement economic ties as the EU recovers from a sovereign-debt crisis and China increases its role in global commerce. Such a deal may also open markets for small farmers and large food and ingredients companies.
"Agriculture will be the toughest part of any negotiations," Tim Burrack, 61, who raises more than 2,000 acres of corn and soybeans along with hogs on a farm near Arlington, Iowa, said in an interview. He's part of a farmers' group called Truth About Trade & Technology, which pushes for greater acceptance of genetically modified goods.
California last year banned the sale and production of foie gras, the French delicacy of fatty goose or duck liver made by force-feeding animals, prompting a politician in France to call for a ban on the sale of California wines.
Italy prefers that Parmesan cheese originate only in its region of Emilia-Romagna, not in factories in America or elsewhere. The EU limits beef injected with hormones, a restriction US lawmakers have said will need to be relaxed in a trade deal.
There is a "fundamental philosophical difference" in European and American attitudes to agricultural policy, particularly over health and safety issues. US officials have said they plan to resolve these differences during the negotiations, which both sides aim to finish within two years.
Livestock and biotech produce could be the "real battle royale here" said Clayton Yeutter, a former US Agriculture Secretary. "It's extremely difficult to get congressional approval of free trade agreements without agricultural support," he said. There will also be political opposition in Europe, Yeutter said.
"The big question is the one on subsidies," which bilateral accords generally don't cover. "Every country has the right to keep its system, in terms of direct aid," he said. Despite high levels of government support, "French beef producers could have some problems if there are massive quantities of meat coming from the US."
Both transatlantic partners have historically supported farmers, through US agriculture bills and the EU's Common Agricultural Policy. Both are meant to boost farmer income while providing a stable, safe and affordable food supply.
Farmers in France were traditionally the biggest beneficiary, though in recent years aid to Greece and Spain has increased. EU direct aid to farmers amounted to €40.2bn in 2011, on a total budget for agriculture and rural development of €58.2bn. Crop subsidies for US farmers in 2013, excluding insurance assistance, will be $10.9bn this year. US government-subsidised crop insurance payments for 2012 losses have already reached a record $14.2bn, according to a congressional estimate.
US imports of agricultural goods from the EU were valued at €11.3bn in 2012, while the US exported €7.4bn of similar products goods to the European bloc. After Canada, the EU is the second-largest agri-supplier to the US.
While US officials have said they'll consider all issues, European Commission president Jose Barroso said last week that that "basic" accords on hormones in livestock and genetically modified goods won't be part of the talks – signaling early disagreement.
In dollar terms, the US would probably gain more from the agricultural component of a trade deal than the EU. Tight government budgets on both sides of the Atlantic may help reduce agricultural subsidies. Still, ingrained attitudes may trump economic arguments with perspectives that contrast as much as the size of farms themselves.
The US had an estimated 2.2 million farms in 2010, with an average size of 169 hectares. The EU had about 12 million agricultural holdings that year, with an average size of 14.3 hectares. At every level it's a clash of culture.
©Bloomberg
Irish Independent
