WASHINGTON, July 20, 2016 - While the United Kingdom’s decision to withdraw from the European Union isn’t likely to have much effect on the global food system, over time it could make it more difficult for the United States and the EU to find common ground on biotechnology and other food trade issues. The first noticeable impact could be in the current negotiations on the Trans-Atlantic Trade and Investment Partnership (T-TIP). The talks so far have made little progress and encountered “serious obstacles in agriculture and food,” says Benno van der Laan, a former European Commission executive now at Greenhouse Communications in Washington.
Without U.K. leverage, EU negotiators are likely to be more responsive to domestic pressure to resist U.S. efforts to gain acceptance of biotechnology and other risk-based U.S. food safety procedures. “NGOs (non-governmental organizations) in Europe have had success with anti-T-TIP campaigns in several countries,” van der Laan told a Farm Foundation forum last week.
EU decision-making likely will be affected by the loss of the U.K. “voice,” he said, because London has generally favored “free markets, new technologies and science-based decision-making” that are parallel to U.S. agricultural imperatives. He suggested that, without the U.K., it would become more difficult for “market access issues such as new biotech approvals for imports, authorization of crop protection products and import tolerances.”
In addition, he speculated that the EU’s trade negotiators may be diverted from T-TIP and other bilateral talks in order to focus on a new trading arrangement with the U.K. “Negotiations for a future deal could be complex, resource-intensive and time-consuming for both” the EU and U.K., he said. “The goal of a (T-TIP) deal before the U.S. elections is probably unrealistic.”
“Scary as it is for the British and the Europeans, it (Brexit) poses no real risk for the global food system,” said Michael Dwyer, chief economist of the U.S. Grains Council. “This will be a ripple. It will barely make a dent in the global food system when you diffuse that across a huge system.” While the vote roiled currency and equity markets for a few days, he said, “I do not expect this level of chaos to continue much longer.” Dwyer’s larger concern is that the political climate could be contagious, encouraging anti-EU forces in other European countries to abandon the union.
John Dardis, senior vice president for U.S. corporate affairs for the Ireland-based dairy and food giant Glanbia, said, “The bottom line is nobody knows what’s going to happen” hereafter. “The effect is a quite scary,” he said. “A fundamental tenet of the EU internal market is free movement of people and Brexit has said we don’t want that.” Dardis suggests that global companies will ask whether the “tea leaves of a protest vote” could be an omen for the U.S.
Skepticism about prospects for T-TIP was echoed in an online statement by the International Dairy Foods Association (IDFA). The Brexit vote “undoubtedly raises a lot of questions about the current state of trade negotiations,” it said. “Although the U.K. has two years to negotiate its withdrawal from the EU, it will no longer be involved in decision-making activities.” IDFA said that the uncertainty would make it “likely that T-TIP talks will cease for now while the EU focuses its efforts on consequences stemming from the UK’s exit.”
A June 22 letter sent by most of the major farm and agribusiness groups to the Secretary of Agriculture and the U.S. Trade Representative illustrated the obstacles to successful completion of T-TIP negotiations. The letter urged the administration to reject a “T-TIP-lite” agreement without strong agricultural provisions, saying it “would do much more harm than good.”
The letter cited a March 31 report by USDA’s Foreign Agriculture Service that the United States ran a record $12 billion trade deficit in farm and food products with the EU in 2015, up 15 percent from 2014. A large share of the deficit is in wine and dairy products. U.S. companies shipped about $100 million to the EU but imported about $1 billion worth to the United States.
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