Cautious Approach Urged In EU Trade Talks

“(Canadian farmers) would be forgiven for suggesting that the standard of support in the EU is risk elimination.”

– TRADE CONSULTANT PETER CLARK

Acautious approach to negotiating the agriculture component of a free trade agreement with the European Union is needed, warns trade expert Peter Clark.

Clark’s observations about the trade talks came as the Commons international trade committee began consultations on the talks. MPs will continue their study after the summer recess, including a trip to Brussels for meetings with European officials.

In a written commentary, Clark said a deal with the EU and its 500 million consumers offers attractive prospects “if the access is really free and not impaired by regulations.”

While Canada and the EU claim everything is on the table, European agricultural subsidies and regulatory systems are not, said Clark, a member of Ottawabased international trade consulting firm Grey, Clark, Shih and Associates.

“The EU wants Canada to open up its dairy markets, to undo the CWB export monopoly and to further open markets for depressed and declining European wine industries,” he noted.

“Yet at the same time, the EU negotiators are not even prepared to discuss concessions to discipline production and trade-distorting support under the Common Agricultural Policy (CAP). It provides tens of billions of euros in support every year to EU farmers.”

Canadian farm groups are getting a clear message that there won’t be “substantial improvements in Canadian access for agricultural and food products,” he noted. Farm groups will have to carefully watch what kinds of exemptions creep into any proposed deal, he added. For example:

Will animal welfare rules for Canada be set by the European Parliament as a condition of access?

How will the trade deal address sanitary and phytosanitary issues and those driven by the “precautionary principle,” such as bans on the use of hormones in beef?

Is the EU prepared to forgo export subsidies on its shipments to Canada, as Canada, the U. S. and Mexico did in NAFTA?

Will Canadian farmers and ranchers be forced to continue to compete with the feed grain subsidies and other benefits available to their European competitors under the CAP regime?

Will the deal change the very detailed EU food purity and food composition rules? What does duty-free access mean – full acceptance of the rules?

Will Canada have to accept EU demands to extend “geographic indicators” beyond wine and spirits? The EU has made clear it considers this an important issue. What will come off the table if Canada is not prepared to agree?

What is the scope for harmonizing veterinary standards?

“RATHER MEAGRE”

Europe is a big-time subsidizer of farmers, while “Canadian farmers are accustomed to rather meagre support for risk management,” Clark explained. “They would be forgiven for suggesting that the standard of support in the EU is risk elimination.”

As well, Europe’s “food security concerns and food safety rules are often based on precaution rather than sound science – and preferences for buying local – as well as a desire for self-sufficiency.”

Steve Verheul, Canada’s chief agriculture negotiator, told the trade committee Canada and Europe have set high goals in the negotiations, in which sessions are planned for July and October.

“After that we will hold a stocktaking to assess progress and plan the next steps in the negotiations; we have made very good progress in the negotiations so far, and that’s the view from both sides. We’re aiming to complete the negotiations next year, in 2011.”

Most of the areas of negotiation fall outside of agriculture.

The EU has sensitivities in areas such as genetically engineered organisms and biotechnology, he said. “These are areas where they feel they have limited room to move. Both countries also have sensitivities in the general area of access for agricultural products, or at least some agricultural products. This will be the subject of discussion further on in the negotiations.”

Gilles Gauthier, director general of negotiations at Agriculture and Agri-Food Canada, said the EU may make proposals related to “supply management, but our response remains the same, which is that the government strongly supports supply management and we have defended supply management in all our trade negotiations and we’ll do so in this one as well.”

“FAIRLY DEFENSIVE”

Traditionally, the EU has “taken a fairly defensive position on agriculture, whether it is in this negotiation with Canada or in other negotiations at the WTO or with other trading partners,” he pointed out.

“I think we need to be creative in trying to find solutions where we think Canadian exporters can serve their market in an effective way, competing on an equal footing with other countries, and supplying a fairly broad-based market.

“After all, the EU is a very large market. They’re the net importer of foodstuffs in many product lines, so why can’t Canada be competitive in these particular segments of the agriculture sector and therefore advance our export interests?”

Canada’s approach, Verheul added, is to ask “‘What does it take to get our product into the EU market?’ (and) not ‘What does it take to lower the tariff?’”

Jacques Pomerleau, executive director of Canada Pork International, told the committee that Europe could be one of the top 10 markets for Canadian pork. But to get there from today’s small level of shipments will require changes to European rules and tariffs designed to block meat imports.

Canada used to have major customers in Europe until the EU implemented tariffs and technical measures to close the door.

The Canada-EU Veterinary Equivalency Agreement still has shortcomings and meat companies face significant expenses and plant registration rules before they could ship there, he added.

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