WASHINGTON: President Barack Obama used Washington’s grandest stage – the State of the Union speech – to announce negotiations with Europe aimed at creating the world’s largest free trade agreement. Just weeks later, there are signs that old agriculture disputes could be deal-killers.
The Associated Press reports that European Union leaders do not want the negotiations to include discussions on their restrictions on genetically modified crops and other regulations that keep the United States farm products out of Europe.
But Obama says it’s hard to imagine an agreement that doesn’t address those issues. Powerful US agricultural lobbies will do their best to make sure Congress rejects any pact that fails to address the restrictions.
“Any free trade agreement that doesn’t cover agriculture is in trouble,” said Cathleen Enright, executive vice president at the Biotechnology Industry Organisation, which promotes biotechnology, including genetically modified products.
That would threaten the dream of a behemoth free trade deal between the world’s two largest trading partners that together account for more than half of the world economy. It would lower tariffs and remove other trade barriers for most industries. Some analysts say the deal could boost each economy by more than a half-percentage point annually and significantly lower the cost of goods and services for consumers.
Agricultural issues have long bedeviled attempts to expand free trade across the Atlantic and have led each side to file complaints against the other before the World Trade Organisation, an arbitrator in trade disputes. While the US protests EU restrictions, Europeans want the US to reduce agricultural subsidies.
Genetically modified organisms, or GMOs, have been a core part of the dispute. Agricultural scientists change the genetic makeup of agricultural products to improve their quality and boost production.
In Europe, there is widespread public opposition to GMOs. The EU argues that the risks of altering the genetic pool are unknown. It has strict rules and imposes a heavy burden of proof before such crops can be grown or imported in the EU.
US companies say that genetically modified products have been proved safe by scientific studies and are being excluded based on irrational fears. They accuse Europe of trying to help their own farmers by keeping out American products.
While they have little expectation that the EU would end the restrictions, they say it would be a victory if it clarified what it describes as opaque rules and also set timelines for considering products. Regulators now take what they call a precautionary approach, declining approval of products until they can be more certain of their safety.
But any move to water down the regulations could provoke a backlash in Europe.
“My reading of the mood in Europe around genetically modified crops is that it’s extremely negative,” said Paul DeGrauwe, a professor of economics at the London School of Economics. “It’s going to be very difficult.”