Transatlantic Trade & Investment Partnership

Tuesday 8th October 2013, As Rahm Emanuel, former White House Chief of Staff to President Obama, once said, “You never let a serious crisis go to waste.”  With euro area unemployment hovering around 12%, and US unemployment struggling to dip below 7%, TTIP brings the Old and New Worlds closer together to reinvigorate their economies.  Lowering tariff barriers and zeroing out duties is only the beginning of benefits to consumers and manufacturers alike.  This “comprehensive” and “ambitious” agreement is diplo-speak for “we’ll even tackle regulatory.”  Enter agriculture.

The agricultural community isn’t exactly welcomed to the negotiation table with ticker tape parade.  Decades long disputes around ag trade, ranging from beef to olive oil, give negotiators heartburn.  But dozens of trade deals—mostly bilaterals—have been successful the world over.  Finding agreement on ag disputes is decried as “impossible” until all of a sudden, it’s not.  Copa-Cogeca representing European farmers and cooperatives put it best, “We believe that the biggest gains will come from resolving regulatory obstacles in a mutually beneficial manner.”

Plainly, EU farming differs widely from US.  Average farm size in the US is 169 hectares versus 22 in the EU, according to OECD.  This explains in part why despite America’s dominance as the number one exporter of ag commodities, it still imports 40% more farm products by value from the EU (especially niche and de luxe) than it exports.

We need one another’s markets.  We need our regulatory systems to work.  And given the moral imperative in achieving global food security, we need science-based risk assessments.  Ask any CEO what they most need out of regulators and they’ll usually answer, “Predictability.”  This applies, for instance, to Intellectual Property Rights intensive industries that provide for one in three jobs in Europe today.

The trouble is populist politics and protectionist economics often hijack the scientific evaluation process. It perplexes farmers, and embarrasses serious scientists when ag products like meat, crop protection chemicals, and high-value seeds are approved on one continent as safe but banned on another.  Considering past traumas to the European psyche like “BSE” in the 1980s and E. coli more recently, farming is and should be a regulated industry.  But, the power to regulate is the power to destroy.  If either negotiation side degenerates into dogmatic defenses of their systems by citing public opinion or thumb-on-the-scale science as justification, farmer productivity will decline while food prices rise.

Berlaymont, Downing Street and the White House are to be commended for rolling up their sleeves on regulatory cooperation.  TTIP ambition is sending the right signal to Transatlantic investors and R&D employers.

Tags: AgriculturebilateralOECDscienceTTIP