Trade Agreements Boost EU Agri-Food Sector

28 Feb 2017 --- Trade agreements have helped to boost EU agricultural exports and have supported jobs in the agri-food sector and other sectors of the economy, according to a new independent study carried out on behalf of the European Commission. Trade agreements with three countries – Mexico, South Korea and Switzerland – were studied in detail.

Commissioner for Agriculture and Rural Development, Phil Hogan said: “These three agreements alone have increased EU agri-food exports by more than €1 billion and have raised value-added in the agri-food sector by €600 million. Just as importantly, this increase in exports has supported thousands of jobs in total across the EU, most of which in the agri-food sector, including in primary agriculture. These figures are clear evidence that ambitious and balanced trade deals work for European food and farming.”

Commissioner for Trade Cecilia Malmström said: “Trade deals, done right, are a force for good for our farmers and food producers. This study also gives important input on how we can continue to cut unnecessary red tape and get rid of barriers in our trade negotiations going forward.”

The study shows that the agreements contributed to increased trade in both directions, with increased EU exports and increased imports of products from these three countries, giving EU consumers and business greater access to agri-food products.

Importantly, the study suggests that these increased imports have little impact on domestic EU production. Instead, they reflect mainly a replacement of imports from other third countries or an increase in EU consumption.

Specifically, in relation to the three agreements, the study shows that: The agreement between the EU and Mexico added €105 million to EU agri-food exports in 2013, three years after both sides had removed all the trade barriers they committed to remove in the agreement. Most of these were processed food and beverages. Additional imports of €316 million in the same year were mostly primary products. The study also identifies potentials for the EU agri-sector in further eliminating current tariffs and barriers. This is now being tackled in the negotiations to modernize the EU Mexico agreement.

Although not yet fully implemented, the EU-South Korea Free Trade Agreement (FTA) added €439 million in additional EU agri-food exports in 2015 (the latest year for which data is available), mostly in the form of primary products and commodities. Additional imports of €116 million in the same year were mostly of processed food and beverages.

The EU-Switzerland trade agreements on agricultural products and processed agricultural products together added €532 million to EU agri-food exports in 2010, three years after they were fully implemented. Most of this was in the form of processed food and beverages. Additional imports of €1.17 million were mostly in the form of primary products.

The study underlines the importance of closely following the trade negotiations of the EU's main competitors to make sure that the EU does not fall behind in access conditions to important markets for agri-food products. It also shows that more recently, ambitious agreements such as the EU-Korea trade deal, which entered into force in 2011, have a higher positive impact than older and less comprehensive agreements like the 2000 EU-Mexico agreement. This is a sign of the increasing quality and effectiveness of EU trade agreements in terms of removing barriers and of the success of the sector in improving competiveness.

The study also emphasizes the importance of EU promotion and information campaigns in helping EU exporters access new markets and grow their businesses in existing markets. The Commission has significantly increased its promotion budget and Commissioner Hogan has already carried out high-level visits to six countries (Colombia and Mexico, China and Japan, Vietnam and Indonesia) to promote EU agri-food products and offering EU companies and organizations the chance to find new business opportunities there. The next such visit will be to Canada – which has just agreed its own free trade agreement with the EU – in May. EU Trade Commissioner Malmström will also visit Canada in March, as well as Singapore (another country with which the EU has recently concluded a trade agreement), and Mexico later in the spring.

EU Agri-Food Exports Reach Record High in 2016

The three trade agreements also contributed to a record year for EU agri-food exports in 2016, with total exports reaching €130.7 billion, up €1.7 billion on 2015. The biggest increases in annual exports were to the USA (up €1.26 billion) and China (up €1.06 billion). At the same time, the value of EU agri-food imports went down 1.5% to €112 billion. The agri-food sector accounted for 7.5% of total EU exports in goods in 2016; 6.6% of all imported goods are agri-food products. With a surplus of €18.8 billion the agri-food sector contributes almost half of the overall surplus of the European Union in merchandise trade, which stood at €39.3 billion in 2016.

Leadsom Vows to Protect Food Trade with EU

Addressing the National Farmers' Union conference, the Defra Secretary laid out the five principles she thinks should frame food and farming post-Brexit, and vowed both to protect food trade with the EU and pursue deals with other partners.

In her keynote speech to the 2017 National Farmers Union conference, Defra Secretary Andrea Leadsom laid out five principles to guide the British food and farming sector, as it adapts to the 'great opportunity' presented by Brexit.
 
But first she acknowledged the importance of the EU in the British food economy. On one hand, 86,000 farmers are eligible for EU payments, and for some the payments make up 70% of their income. On the other, 60% of exports go direct to the EU, and four out of five of the biggest markets are there. The Secretary said these markets were secure: “The EU is our most important trading partner, a fact that won’t change when we leave, and a relationship we are determined to uphold.”
 
Unsurprisingly, therefore, Trade was the first of the five principles she mentioned. The others were Productivity and innovation; the environment; animal and plant health and welfare; and resilience.