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Impact of Future Trade Agreements on EU Agricultural Sector

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Impact of Future Trade Agreements on EU Agricultural Sector

Impact of Future Trade Agreements on EU Agricultural Sector
November 23
09:11 2016

The European Commission has produced a study on the cumulative effects of 12 future trade agreements on the agri-food sector, including specific results for producer prices and production volumes for a range of products accounting for 30% of the value of the EU exports in the sector. The study illustrates the potential for European agricultural products on the world market, while at the same time also showing the sensitivity of specific agricultural sectors.

The Commission also published the latest agri-food trade figures which showed a record value for EU agri-food exports in September 2016 of almost €11.5 billion, confirming the opportunities for the sector. The detailed knowledge on the potential impacts that the present study on future trade agreements provides will allow the Commission to make informed choices during the negotiation process. The study as such is not a prediction or forecast but a highly theoretical exercise with many limitations reflecting potential outcomes of the successful conclusion of the agreements covered.

Vice-President Jyrki Katainen says: “The overall picture is positive for high-value European agricultural exports. This study shows that there are sensitivities, however, it focuses on only one part of agricultural sector and does not measure a number of agri-food products which have significant export growth potential. This balance is fully reflected in the EU’s trade negotiating strategy, in which we seek to protect our vulnerable sectors through measures such as tariff rate quotas, while maximising our positive interests whenever possible. Growth in the area of processed food, in particular, also has positive knock-on effects for the primary production sector. EU exports of agricultural commodities support 1.4 million jobs and another 650,000 jobs in the processed foods sector also depend on our ability to export. The EU economy as a whole benefits greatly from trade as shown by the recent free trade agreement with South-Korea.”

DairygoldCowsSignificant gains are anticipated for the EU dairy and pig meat sectors, two sectors which have struggled in recent years and which are now showing signs of recovery. On the other hand, the study shows vulnerabilities for beef and rice, both in terms of trade effects and a decline in producer prices. The extent of the impact for these different products varies depending on whether one looks at the more “ambitious” (full liberalisation of 98.5% of all products, and a partial tariff cut of 50% for the remaining products) or more “conservative” (full liberalisation of 97%, and 25% tariff cut for the others) scenarios of the study.

The results of the study also confirm that the EU’s current approach of limiting the liberalisation of imports of sensitive agricultural products in all trade negotiations is the right one. In the case of the agreement recently reached with Canada (known as CETA), the EU will eliminate 92.2% of its agricultural tariffs at entry into force of the deal (reaching 93.8% after seven years). The TRQ agreed for beef in CETA amounts to 45,838 tonnes, to be phased in over 5 years and corresponding to about 0.6% of total EU consumption. Another example is rice: in the trade deal with Vietnam, the EU will only partially liberalise imports of rice, with the rice TRQs representing about 8 per cent of total EU imports, two thirds of which will be earmarked for rice not produced within the EU or to be further processed by the EU rice industry.

The outcome of the study has been presented to EU Ministers and it is expected that a further discussion will take place in the Agriculture Council under the Maltese Presidency in January. The study on the cumulative effects on agriculture does not replace the broader and more detailed impact assessments and sustainable impact assessments carried out for each trade negotiation.

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