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Editorial - EU agriculture requires consistency between the Green Deal and trade policy

19 March 2021

In an opinion piece, Cogeca President Ramón Armengol explains that the future of EU agriculture will depend on consistency between the Green Deal and EU trade policy.

In February, the executive Vice-President and Commissioner for Trade, Valdis Dombrovskis presented a communication of fundamental importance for the EU farming sector; the EU trade policy review.

For me, this announcement should be considered at least as important as the well-known Green Deal lead by Vice-President Frans Timmermans. In fact, if the Green Deal represents one leg of the future farming policy of the EU, the trade policy review represents the second leg, essential to the smooth running of our model of agriculture. Most comments made around the Green Deal tend to forget this fundamental fact: the EU agricultural model cannot be understood without considering its international trade dimension. European farmers and their cooperatives know all too well the micro-level effects of those macro-level trade policies (eg. Russian Ban, Airbus-Boeing dispute).

To spin the metaphor, just like when running, it is essential to be coordinated and to have equal determination and rhythm because any inconsistency would mean a fall. So far, Commissioner Dombrovskis’ announcements are meant to be reassuring and show that the EU executive has a clear understanding of the importance of what is at stake for our agriculture by proposing to work on developing standards for sustainable growth and by trying to shape international standards in line with the European Green Deal. However, we are still at the stage of declarations.

Many inconsistencies are to be feared. Despite the efforts made in the recent communication, it’s not clear how the Green Deal will factor in the trade realities and what its impact will be in terms of market prices, farm income and food security. Can the Commission guarantee that imports from third countries comply, at farm level, with all our production standards? Can we expect that farmers in third countries will exclude 10% of the farmland from production as required from EU farmers within the Green Deal? The answer is no, because it would not be in line with our international commitments nor with WTO guidelines.

The EU Green Deal objectives need to be reflected within the EU trade policy, and trade realities need to be factored into the Green Deal.

Copa-Cogeca has always supported trade within the EU and with third countries. We don’t forget that of the 44 million jobs that are linked to agri-food chain activities, around six million are directly linked to exports. Each export of €1 billion means 16,000 jobs are created in the EU. Agri-food exports represent almost 1/3 of the EU’s total net trade balance. In a post-COVID world, our trade must be based on balanced, fair and transparent rules to avoid distortion of competition.

The best way to ensure this approach is through multilateral trade agreements. I agree with the EU trade review that the best way to ensure the following principles is through the WTO and a reform that now seems possible with the change of approach in the US administration. We support new concepts around international trade disciplines, for instance around the Carbon Border Adjustment Mechanism, environment, and well-functioning dispute settlement body. We should establish common ground with our allies on food safety, sustainability, or the climate. In particular on how to integrate the Paris climate agreement into the trading system with clear enforcement mechanisms. While we have been able to develop a common position with our trading partners in certain areas through bilateral agreements, without a sufficient WTO framework, the sector still faces a series of challenges.

When it comes to future bilateral trade agreements, the Commission tends to be reassuring by proposing “a chapter on sustainable food systems” for all future deals. This should become a non-negotiable factor in free trade negotiations. However, would this chapter be enough to ensure the consistency of our future agreements with the principles of the Green Deal? From my point of view the limitations and obligations to which European producers must adhere to will be hard to monitor effectively and we will have to remain extremely careful.

European agriculture has sufficient resilience to adapt to the Green Deal if this policy does not act as a mechanism for environmental dumping!

European agriculture is among the most advanced in terms of its commitment to climate and the environment, and we could see a path on how this could go further in line with the ambitions of the "Green Deal". We are and will be the first to be affected by climate change. There are no climate deniers among the farming community, and we are all trying to take action on our farms and in our cooperatives. Nevertheless, when turning wishes into actions, we need to have the capacity to make the necessary investments. This is where the EU trade policy review could have a decisive impact, at least equal to the Green Deal one.

One of the main risks that our agriculture sector will have to face as a side effect of the European Green Deal is dumping from countries that will voluntarily or involuntarily move more slowly with the adoption of a greener agriculture. This could result in the relocation of our agriculture to other parts of the world, with lower standards, while compromising our food security. While at the same time in Europe, remaining farmers will be squeezed between two walls. On one hand, the Green Deal will ask for additional investment on sustainability to raise our standards. On the other hand, the cumulative access from the 60+ trade agreements to our market by third country producers, that do not always have to fulfil the same production standards, will continue to bring prices down.

In the short run, the main issue for me lies in what the European Commission chastely calls the “vast network of bilateral trade agreements”. This strategy has proven to have positive impacts for some sectors such as the wine or olive oil sectors, which is particularly important for the producers’ regions. However, when providing market access on sensitive sectors to third countries that do not share the same green ambitions, the cumulative impact will put enormous pressure on EU farmers, which will considerably reduce their ability to invest in our natural resources, undermining the objectives of the Green Deal.

This fact has been recognised recently by the Joint Research Centre in its most recent report on the EU trade policy, as it found out that beef, sheep and poultry meats, sugar and rice should be considered sensitive in any trade negotiations. At the same time the Commission is proposing to reduce consumption of some agricultural sectors.

Any decision taken within the Green Deal or our trade policy must be subject to a rigorous impact assessment. The future of our agriculture is at stake!

I can’t avoid a final point on the elephant in the room, the EU-Mercosur trade deal. This agreement, at its foundations, could create an unacceptable competition situation for parts of the EU farming community. The European Green Deal makes this gap even wider. If the European Union proceeds with the Green Deal without ensuring that our agriculture output and competitiveness are maintained, the basis of our existing trade arrangements is questioned. We are glad to keep leading the charge in the battle for a greener, more sustainable agriculture in Europe, but we have no appetite to end up the dead hero of this story.

This is why we need a comprehensive impact assessment of the Green Deal and the accompanying regulations. Without it, we all are navigating completely blind. If we don’t identify the blind spots beforehand, we will be undermining all our efforts to successfully implement the Green Deal and safeguard the EU model of agriculture. For decades, civil society has been pushing EU decision makers to perform a comprehensive impact assessment of major EU policies. Why should the Green Deal receive a free pass considering what is at stake?

Ramón Armengol, Cogeca President



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