Trade Talks Update

There has been some developments over recent weeks in trade negotiations that could have an effect on agricultural markets.

Mercosur

Mercosur is the group of South American countries including Brazil, Argentina, Uruguay and Paraguay.  The EU started free trade talks with the block back in 2004, but they had gone nowhere.  The installation of a new Argentinian government earlier this year has reinvigorated the talks.  The negotiators have now got to the point of putting preliminary offers on the table.  With the South American countries highly competitive in many agricultural products EU farmers’ groups have raised concerns about the level of access to be offered.  As a result the EU has decided not to table proposals for ‘sensitive products’ such as beef and ethanol in its first draft offer.  The idea seems to be to hold back these key negotiating cards for later in the process.  The talks are unlikely to be concluded anytime soon.  Further meetings are scheduled for the rest of the year with the earliest likely date perhaps late 2017.  A recent study by the European Joint Research Centre estimated that EU farming could lose €7bn if a full trade deal was agreed.  The gain for Europe is in other parts of the economy such as selling good and services to South America. 

TTIP

TTIP is the Trans-Atlantic Trade and Investment Partnership; it is a proposed trade deal between the EU and the US.  There has recently been a leak of negotiating documents from the Americaside, via the NGO Greenpeace.  This has been presented as any TTIP deal would be likely to lower EU environmental and food standards.  As ever, the detail is rather more complicated than this.  The talks are attempting to harmonise standards, and the papers set out the two sides are still a long way apart (the standards on each side of the Atlantic are just different, not necessarily better or worse).  However, the US position is looking to get specific rules on easing trade in GM crops into the deal, and is also against fully recognising the EU’s system of Geographic Indications – especially in the wine sector where names such as ‘Champagne’ have become generic.  Because issues such as standards are so technical, it is likely to take a long time to conclude a deal.  With the US Presidential Election due in November there is some doubt about whether any TTIP agreement will be concluded in the next four years.  Both candidates Trump and Clinton have been notably cool on trade deals during the campaign so far.