After enduring recent challenges such as the Russian embargo, EU food exporters now face an uncertain future, with lingering doubts over the euro-dollar exchange rate and the future of the pound.
Trump took charge of the White House one month ago and already his promises to defend US borders and put “America First” are becoming a reality. On 23 January, the US president signed an executive order removing the country from the Trans-Pacific Partnership (TPP) free trade agreement (FTA), which includes eleven other nations.
President Donald Trump signed an executive order formally withdrawing the United States from the 12-nation Trans-Pacific Partnership trade deal yesterday (23 January) as Europe sniffed a chance to pick up the free trade the US is turning its back on.
For now, the Transatlantic Trade and Investment Partnership (TTIP), the FTA under negotiation between the US and the EU since 2013, is languishing at the bottom of Donald Trump’s list of priorities. The negotiations have sparked great controversy within the agri-food industry and animosity between governments and political parties.
Javier Guevara, the director of food and gastronomy at the Spanish Institute for Foreign Trade (ICEX), said, “The commercial prospects for European food products remain positive,” although there are still “obstacles” to overcome.
Among them are the Russian embargo on EU food imports, “uncertainties” surrounding relations with the US and the “Brexit effect” on the EU economy, Guevara told EFE AGRO.
Given this, he said the bloc should “keep searching for new markets in Asia, Latin America and Africa”. The new opportunities such efforts could open up would alleviate exporters’ current difficulties, which the expert dismissed as “temporary”.
EU Trade Commissioner Cecilia Malmström told Euractiv Spain that the bloc’s Canada deal (CETA) has “the highest standards” and confirmed Mexico and Mercosur are next on the negotiating agenda.
Meanwhile, cooperatives and agricultural organisations say they expect more changes in the near future.
“This can be a challenge or an opportunity,” said the director of international relations for the Spanish Agri-food Cooperative, Gabriel Trenzado. In his view, the most important thing is to understand the free trade agreements “as a whole” and for the European Union “not to sign them too hastily”.
For now, he added, the Spanish agri-food cooperatives have not seen any “immediate” effects from these decisions and trade remains “very fluid” with the United States. Although “Trump has proved he will do what he said”.
The director of international relations at Spain’s Association of Young Farmers (ASAJA), Ignacio Lopez, said farmers should remain alert before TTIP is officially stopped, because “we do not yet know where the EU negotiators will go next”.
He is particularly concerned about the EU’s intention to relaunch the Mercosur FTA talks. The standards of agricultural production in this group of South American countries are far lower than those in Europe, and he worries this could harm EU farmers.
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The Secretary-General of the Spanish Farmers and Ranchers Organisations (COAG), Miguel Blanco, stressed that all these changes are generating “huge uncertainty” in the sector in terms of production and market orientations.
He believes that while “TTIP is harmful at all levels”, especially in terms of quality and food security, it would be worse “if we adopted Donald Trump’s standards”.
Spain’s Union of Small Farmers (UPA) insists on its “firm opposition” to TTIP, which the organisation believes would use agriculture and livestock as tradeable currency. But it acknowledged that “its final cancellation, like with other treaties that affect the economy of the entire planet, is neither a cause for celebration nor tranquility”.
For the UPA, Trump’s support for other leaders, such as Russian President Vladimir Putin, who has “done so much damage to Spanish agriculture with his embargo”, raises fears that the US “may consider this kind of protectionism in its policy catalogue”.
As the fog of uncertainty thickens around TTIP and the EU sets off down the path towards Brexit, the bloc is beginning to turn to other markets, such as Canada. The European Parliament last week (15 February) approved a landmark FTA between the EU and Canada (CETA) with a large majority of 408 votes to 254, with 33 abstentions.
Canada is an important market for the European Union. In 2015, the country spent a total of €3.42 billion on EU agri-food products, while the EU imported around €2.2bn-worth of Canadian products.
Canada is the ninth-biggest destination for EU agri-food exports outside its own borders, a list topped by the US, followed by China and Switzerland. The categories of products most exported by the EU to the Canadian market are wine, vermouth, cider and vinegar, liqueurs and spirits, and chocolates, confectionery and ice cream, according to the European Commission.
European agri-food exporters, and in particular those in Spain, who have consistently driven the sector onwards even in the midst of the economic crisis, are holding their breath to see how this period of international political uncertainty will affect them in the long term.