You’ve probably heard of CETA, TTIP, the Mercosur deal
as the debate over these free trade agreements - or FTAs -
has grown over the past years.
In this video I’ll be talking about FTAs
and what makes EU foodstuff so crucial in trade negotiations.
Well, food is particularly important in the context of these FTAs
and when it comes to EU’s trade policy in general.
Foodstuff could actually make a real difference
between a deal and a failure
in both trade negotiations and the long process
coming after the FTAs ratification, which is the formal approval of the agreement.
Here’s one example:
You know the halloumi cheese, don’t you?
The Cypriot white gold.
Delicious on the grill.
Anyway, the Cypriot national parliament last August
refused to ratify the Canada-EU FTA, the CETA.
The reason?
The treaty would not adequately protect halloumi cheese.
So an agreement that took 5 years of negotiations,
involving 28 countries,
removing 98% of the preexisting tariffs between the two parts
could be at risk of derailing
because of that delicious slice of grilled halloumi.
Is it worth it? I’m quite hungry at the moment
so I shall not answer the question.
Speaking of FTAs, there are, of course, different types of trade blocs
depending on how much the trade partners are integrated.
Starting from the simplest form,
namely simple partnership and cooperation agreements
which provide a general framework for bilateral economic relations
but leaving customs tariffs as they are.
Then you go up to association agreements and free trade agreements,
with which you remove or reduce customs tariffs in bilateral trade.
And then you have customs unions
which are free trade areas plus a common external tariffs.
And at the top finally you have Single Markets,
the European Union for instance is a single market,
which is one of the deepest forms of trade integration
and it also involves the free movement of
goods and services, capital and labour.
Here’s a quick overview:
As of 2020, there are 36 main preferential trade agreements
negotiated by the Commission and approved in the different EU countries.
The latest to enter into force was the one with Vietnam this Summer,
but the EU has also an FTA with South Korea,
which was a role model for other agreements for quite a while.
Other remarkable deals are the ones with Singapore
in force since 2019
and the “famous” CETA with Canada
which is provisionally applied since 2017.
There are 5 new agreements currently being negotiated:
the one with Australia,
China - which is actually an investment agreement,
Indonesia, New Zealand and the Philippines.
And there are several others in pending,
meaning that the negotiations are over and a political deal has been struck
but it requires to be ratified by member states.
The most famous case is the association agreement
with the economic and political bloc, Mercosur,
which is made up of
Argentina, Brazil, Paraguay, Uruguay,
Venezuela - who currently suspended its membership
and Bolivia.
But there are also pending deals
with different West Africa countries, East African Community
and the Caribbean countries.
How big is the EU trade in agriculture and food products?
Quite big.
In the first ten months of 2020,
EU27 agri-food trade, so exports plus imports,
reached a value of 153 billion of euro.
This boom is quite recent.
Historically, the EU has been a bit defensive in agriculture.
But over the last 10 years something has changed.
There were reforms of the Common Agricultural Policy
that made farmers more market-oriented,
but also global population growth, increased the demand for food
and consumers preference for EU quality products,
and also several FTAs have been concluded.
Now the EU is the world's biggest agricultural exporter and importer
and have a big trade surplus of almost 50 billion euro.
10 years ago, the EU countries were exporting
about 7% of what was produced.
Now that's doubled.
And one in seven jobs in the EU depends on exports.
So, the more farmers are competitive
the more are not afraid to place their products in the global markets.
But of course trading agriculture stuff
could bring some problems and raise concerns.
For instance, there is also a growing awareness of environmental issues,
such as climate change and global plastic contamination.
With its recently unveiled flagship food policy,
the Farm to Fork strategy,
the European Commission is committed to make the European food system
a global standard for sustainability.
So this strategy aims to promote shorter supply chains
which is something that might go against
the very concept of trade areas,
which rely on global supply chains.
This environmental element is a 'biggy'
with the upcoming talks on the Mercosur agreement
which, after 20 years of negotiations,
has still yet to be ratified.
Several elements are also taken into account during negotiations,
like protection of EU’s geographical indications in third countries,
food safety and quality,
but also a sort of level playing field
between EU farmers and third-country farmers.
Because European farmers can feel
that there is unfair competition
when the EU imports food which has been produced
with lower animal welfare, labour and environmental standards.
But the topic is so big that we should do another video explainer on that.