America’s farmers and ranchers are eager for a U.S. free trade agreement with the U.K., but only if the British are willing to eventually make a clean break from the European Union and all of its restrictions that hamper or block U.S. farm commodities.
That was the predominant message Tuesday from representatives of the U.S. ag sector to a panel of Trump administration officials as the Office of the U.S. Trade Representative prepares to begin negotiations with their British counterparts.
“The U.S. and the U.K. need to consider a transparent, science-based and systematic approach to normalize trade and avoid tariff and non-tariff barriers,” Floyd Gaibler, the trade policy and biotechnology director at the U.S. Grains Council, told the panel, made up of representatives from the EPA, USDA, USTR and State Department.
That translates into the British being willing to divorce itself from European restrictions like a ban on pork from swine treated with ractopamine and an overly complex, a burdensome and political biotech trait approval system and severe restrictions on crop pesticides.
“Currently the U.S. pork industry … is almost completely locked out of the U.K.,” said Craig Thorn, a lobbyist representing the National Pork Producers Council at the hearing. “If the terms of Brexit allow the U.K. to negotiate trade agreements consistent with pro-market principles, we see the potential for an important and mutually beneficial agreement.”
Unfortunately, with the chaos surrounding Great Britain’s attempt to leave the EU, it’s still unclear what will and won't be possible.
British Parliament firmly rejected Prime Minister Theresa May’s so-called “soft Brexit” proposal earlier this month that would have resulted in the U.K. remaining in the EU customs union for a “transition period” at least until December 2020 and possibly for two years after that.
“The primary concern is that rather than operating under regulatory autonomy from the EU, the current Brexit Withdrawal Agreement continues to have the U.K. subject to the EU regulatory system — meaning biotech, pesticides and other SPS issues will be just as intractable as they have been with the EU,” Gaibler said.
Tariffs are also a major barrier to trade and the EU’s import taxes on U.S. dairy products keep trade to just a fraction of what it could be, according to testimony from Dave Carlin, a senior vice president with the International Dairy Foods Association.
The U.K. imports about $3 billion worth of cheese, butter, skim milk powder and other dairy every year, but only a small fraction — about $9 million worth — comes from the U.S. and that’s because of the tariffs it must apply as part of the EU customs union, said Carlin.
That British adherence to EU restrictions and tariffs could all come to an end after the transition period, but maybe not. During that time, the U.K. would have been able to negotiate free trade agreements with countries like the U.S. that could go into effect after the transition ended. A problem with that scenario is that the U.K. would also likely be negotiating trade terms with the Europeans.
But May’s original plan was rejected. She now has a “Plan B,” but critics have claimed it is nearly the same as the original and is just as likely to be rejected.
One thing that is clear is that the Trump administration stands firmly behind U.S. farm groups that want the U.K. to jettison the European system for approving genetically modified plants.
“The EU risk assessment process by the European Food Safety Authority takes nearly 4.5 years, far beyond the 19-22 months prescribed by EU law,” Gaibler said.
Just this week the U.S. heaped new criticism on the EU biotech approval system. Speaking at a World Trade Organization meeting, a U.S. official in Davos complained, “Delays persist and affect dozens of applications that have been waiting for months or years or that have already received approval. Further, even when the EU finally approves a biotech product, EU member states continue to impose bans on the supposedly approved product.”
Core to use frustrations is an EU rule that allows any individual country to “opt out” of an approval with no scientific justification. Currently there are 17 “opt out” requests being considered to sidestep EU approvals.
The quickest way for the U.K. to completely sever its ties with the EU would be for the British to crash out of the trading bloc on March 29 without any exit deal in place. It’s not an action supported by many except some fervent Brexit supporters because of the chaos it could cause the British economy, but Gaibler said it could be very good for the U.S.
“If that materializes, there would also be greater scope for regulatory alignment between the U.K. and the U.S. in a future trade deal,” he said.
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