Agriculture in theTransatlantic Trade and Investment Partnership
U.S. Department of Agriculture’s (USDA) report1
Currently under negotiation between the United States and the European Union, the Transatlantic Partnership or TTIP is portrayed by its proponents as a way to boost the economies of these two regions. Nonetheless, there are many tensions and very mixed views, particularly with regards agriculture. Two issues remain unresolved: what real economic effects on agriculture should be expected of the TTIP? Is the TTIP really an opportunity for world economic growth, as it is portrayed by its enthusiasts?
In response, there have been many critical evaluations to the studies that outline the benefits and the future economic advantages of the partnership. For if according to the European Commission, the potential economic stimulus of the TTIP would be 120 billion euros for the European economy, 90 billion euros for the US economy and 100 billion euros for the rest of the world, the estimated gains are actually minimal and the risks real.
Criticism has also come from unexpected places. In a recent report (extract here2), the USDA looks at three scenarios that measure the impact of the liberalization of agricultural trade within the TTIP. The conclusion is clear: European agriculture will be widely and negatively impacted in favour of US agriculture, the gains of which would be substantial.
Improving our trade relations is obviously a priority for European growth, but not at any cost. And especially not by bypassing one of the most strategic sectors, namely agriculture and food. Because, with all due respect to the European Commission, which negotiates the TTIP on behalf of the 28 member-states, free trade agreements are anything but solutions to the crisis in Europe and more particularly agriculture.
momagri Editorial Board
What Is the Issue?
The Transatlantic Trade and Investment Partnership (T-TIP) is being negotiated between the
United States and the European Union (EU). The two regions accounted for almost half of
global gross domestic product (GDP) in 2013 and $35 billion in bilateral agricultural trade.
While overall tariffs in the United States and EU are generally low, they are still relatively
high for food and agricultural goods, most often in the form of tariff-rate quotas (TRQs).
Additionally, U.S.-EU trade is restricted by other significant barriers, such as non-tariff measures (NTMs) that are especially prevalent for many agricultural commodities. NTMs are
usually not considered in trade policy analysis because they are not easily quantified, leading to several data, methodological, and conceptual challenges. These issues have been prominent in the T-TIP negotiations, and an analytical approach to help understand their impacts on food and agricultural trade may benefit all stakeholders.
What Did the Study Find?
A T-TIP agreement could address several barriers facing agricultural trade, including tariffs,
TRQs, and NTMs. This report considers potential impacts of an agreement under three broad
Scenario one (removal of tariffs and TRQs). In the first scenario, U.S. agricultural exports to the EU increase by $5.5 billion from base year (2011) levels, while EU agricultural exports to the United States increase by $0.8 billion. Overall, U.S. agricultural exports increase by 2 percent and agricultural imports by 1 percent. EU agricultural exports decrease by 0.25 percent, and agricultural imports rise by 0.5 percent. Among major U.S. agricultural export commodities, beef and dairy exports to the EU increase the most in percentage terms. The EU exports more vegetable oil and cheese to the United States and also produces more of these commodities, although the percentage increases in production are modest. The EU imposes higher tariffs on imports than does the United States, which accounts for the larger U.S. export gains in the scenario.
Scenario two (removal of select NTMs, in addition to tariffs and TRQs). NTMs commonly imposed in agricultural trade comprise sanitary and phytosanitary measures that help to ensure food safety but also create technical barriers to trade that require imports to have
specific product characteristics. In the second scenario, the additional removal of select NTMs (e.g., meats, field crops, and fruits and vegetables) results in an increase in U.S. exports to the EU by an additional $4.1 billion over gains in the first scenario. For the EU, the removal of NTMs generates an additional gain of $1.2 billion in exports to the United States. U.S pork exports to the EU increase by $2.4 billion, and EU exports of fruits and vegetables to the United States increase by $495 million and $613 million, respectively. U.S. exports of poultry to the EU increase by a high percentage but the level change is only $18 million due to small base trade. Increases in bilateral U.S.-EU exports of individual commodities do not all lead to production increases, as commodities with modest increases in exports may lose resources to commodities with large increases. Overall, agricultural imports and exports each increase for the United States by about double the percentage in scenario one, while EU agricultural imports increase by 1 percent and agricultural exports decline.
Scenario three (effects of removal of NTMs on consumer demand). The removal of select NTMs could lead to consumers preferring domestically produced products versus the importer equivalent. Thus, in the third scenario, export gains are smaller for both the United States and the EU. Potentially, these demand-side effects could erase any gains from the removal of specific NTMs.
Overall, gains in bilateral and net exports due to T-TIP lead to production increases in many U.S. agricultural commodities. Some U.S. agricultural commodities have a decrease in production due to increased competition for resources. The increase in agricultural exports also leads to increases in almost all U.S. agricultural prices.
For the EU, the increase in imports results in a decline in agricultural prices. The GDP of both the United States and the EU increases as a result of T-TIP, though the rate of increase is higher for the EU, due largely to export gains in non agricultural products and lower prices on imports. GDP changes are uniformly modest, onethird of a percent or less.
1 Beckman, Jayson, Shawn Arita, Lorraine Mitchell, and Mary Burfisher. Agriculture in the
Transatlantic Trade and Investment Partnership: Tariffs, Tariff-Rate Quotas, and Non-Tariff
Measures, ERR-198, U.S. Department of Agriculture, Economic Research Service,
2 The entire report is available from :