SPECIAL REPORT: TTIP Will Lead to “Economic Growth and Jobs” for The Food Industry but Time Could be Running Out on Striking a Deal

16 May 2016 --- US and European food companies have cited a number of reasons to champion The Transatlantic Trade and Investment Partnership (TTIP) from benefiting the global economy to job creation but critics say the deal will lead to lower food safety standards across the EU while others believe TTIP might not see the light of day.

Speaking to FoodIngredientsFirst Charla Lord, an executive at US agrochemical company Monsanto, said: “The US agriculture community, in general, supports trade agreements as they enhance transparency, predictability, and science based regulatory regimes.”

In essence, TTIP is a series of trade negotiations which look to reduce regulatory trade barriers between the US and the EU spanning everything from banking regulation, environmental legislation and food safety.

While largely seen a pro-business, TTIP has been attacked by campaigning groups as “an assault on European and US societies by transnational corporations” and will lead to a lowering of safety standards.

As an example of the potential pernicious impact of TTIP, campaigners cite plans by the EU to lift a ban on US imports of chicken washed in acid disinfectant (so called chlorinated chicken), a process which campaigners think presents a serious hygiene risk.

The potential gains from TTIP, which must be approved by all 28 EU Countries, could be up to €119bn ($134bn) a year for the EU and €95bn ($107b) for the US, according to European economic think tank, the Centre for Economic Policy Research.

Those in favor of the agreement say TTIP will create a free trade zone covering 800 million people which would act as a counterweight to China’s growing economic power.

For the food industry, the agreement has significant implications, particularly as it would look to harmonize GM (genetically modified) labeling and rules around use of pesticides across the Atlantic.

The transatlantic debate around GM labeling has raged for years, with the EU and US regulatory landscape at odds with each other. 

In contrast to the US, where around 70 percent of all processed food sold in US supermarkets contain genetically modified ingredients, the food supply chain in the EU is for the most part GM free - a situation that US TTIP negotiators want to change.

US negotiators see EU GM labeling demands – a more holistic, farm-to-fork approach which considers ethics, environmental and social impact as well as science – as a trade barrier which is hurting US agri-businesses’ overseas sales.

Instead, they believe they should adopt the US approach based on scientific assessment.

According to Swiss agribusiness Syngenta this “science-based regulatory” approach benefits safety and promotes innovation.

Speaking to FoodIngredientsFirst, Syngenta executive Sydne Saccone said: “Syngenta welcomes TTIP as a great opportunity to strengthen transatlantic ties and create economic growth and jobs. We recognize that TTIP would be the first international trade agreement that includes regulatory coherence and as such intends to tackle tariff and non-tariff trade barriers."

“Science-based regulatory cooperation and harmonization on horizontal and sectorial issues will benefit consumers’ safety and promote innovation. In the long term, standards set by TTIP will affect future trade deals: it is therefore crucial to achieve an ambitious outcome.”

Speaking to FoodIngredientsFirst, Campbell Soup executive Carla Burigatto said: "Campbell has long supported free trade agreements that reduce tariff and non-tariff barriers to entry into international markets and enhance regulatory cooperation."

“Past agreements, including NAFTA, support jobs at Campbell manufacturing facilities. We believe a US-EU agreement would also ultimately benefit Campbell and U.S. manufacturers, but those negotiations are not complete and an agreement is not in place.”

While food campaigners believe such as harmonization of laws would lower food standards across the EU – a concern fervently denied the European Commission – there is also concern that TTIP could compromise efforts by individual US states to raise food standards in the US.

Not only, for instance, is the state of Vermont introducing mandatory GM labeling on July 1 but, more broadly, food welfare standards are a patchwork across the US-for instance, California has banned the use of small cages for hens, applying stricter welfare standards than many other US States and some EU countries.

Karen Hansen-Kuhn, a director at the Institute for Agriculture and Trade Policy (IATP) said: “The push to ‘harmonize’ standards in TAFTA could undermine many important efforts by US states to raise the bar on food safety, labeling or other efforts to rebuild our food system so it works for farmers and consumers.”

TTIP could also have significant implications for the use of pesticides, as it could look to harmonise rules to help boost trade.

According to the European Parliament, 82 pesticides used in the US are currently banned in Europe.

Across the EU, regulation of EU system is focused more on "risk" (a risk assessment on more factors than scientific data is required before use of a pesticide can be authorized) while the US is focused more on "hazard" (the onus is on authorities to prove that a chemical is present a hazard before imposing a ban).

In essence, the US and the EU are in disagreement over the maximum level of pesticide residue allowed in food.

There is concern that TTIP might undermine the European Food Safety Authorises rules by permitting higher chemical residue levels.

The European Crop Protection Association (ECAP) is backing the deal, saying it represents a “great opportunity” to forge closer relations between the US and the EU.

It said: “TTIP presents a great opportunity to foster closer and better cooperation between the regulatory systems. It should not however be seen as a tool for lowering existing EU and US standards for the protection of health and environmental standards."'

The controversy around TTIP has already prompted claims that some EU countries are bowing to pressure from US companies and allowing banned products-including GM crops and chemically washed bee – into the country ahead of any agreement being reached.

The director of anti-poverty group Global Justice Now Nick Dearden said that according to a report in the Washington Trade Daily, the EU’s chief trade counsellor Damien Levie told a US conference audience that genetically modified crops and chemically washed beef carcasses were being allowed into the EU ahead of a deal.

Earlier this month, it was suggested by France’s trade minister that TTIP negotiations had hit a stumbling block amid talk that Europe was offering more to the trade deal than the US.

Matthias Fekl said a freeze in the TTIP talks was the "most likely option" without a change from the US.

The French minister said Europe was offering a lot with little in return and said that France was considering all options including an outright termination of negotiations.

Fekl, the French minister for foreign trade, said a halt seemed to be the most likely option in view of the United States' state of mind today. "It is an agreement which, as it would be today, would be a bad deal," he said in an interview.

France is also concerned TTIP does not offer safeguards for French agriculture or improved access for its small and medium-sized companies in the US, he said. "It cannot be agreed without France and even less so against France," he said.

There will also likely be a consumer backlash over possible price increases. The European Commission has just published the results of a study it commissioned on the EU-US trade negotiations which showed that TTIP would lead to average price increases of 0.3%, whereas household income would increase between 0.2 and 0.4%. The study is an interim version of its “Sustainable Impact Assessment” which analyzes the economic, social and environmental impacts of ongoing TTIP negotiations.

Monique Goyens, Director General of The European Consumer Organisation (BEUC), commented: “It is disappointing that TTIP is likely to result in price increases for consumers. This is not what consumers were told when negotiations kicked-off three years ago.”

“Cheaper products were supposed to be the number one consumer benefit of a future trade pact with the US but that claim is now in jeopardy. What is crucial now is that negotiators make consumer issues a key agenda point of these trade talks.”

A further complication is the lack of time to rubber-stamp a deal. Irrespective of how the UK votes on June 23 on its continued membership of the EU, negotiations will continue.

But some believe that if a deal is not signed by the time that Barrack Obama leaves office in January 2017, then striking a deal could stall while a new president is installed.

Should a deal get done, then the landscape for food companies will change dramatically and is likely to lead to a boom in sales for food companies on both sides of the Atlantic.

by John Reynolds