After President Trump came into office one of the first orders he signed was to pull out of the Trans Pacific Partnership (TPP) agreement that involved a group of Asian countries plus Australia, New Zealand, Canada, Mexico and Chile which had been signed off by his predecessor. He also announced that he was withdrawing from the negotiations with the EU under the Trans-Atlantic Trade and Investment Partnership, better known as TTIP.

TTIP deadlock

In reality, it wasn’t really necessary for him to pull out of talks with the EU as they had reached stalemate for some time prior to him becoming president. The sticking point was standards and the intellectual property of geographical indicators (PGIs). The big issue of course is access to the EU for hormone-treated beef, a long-running dispute that has been to the World Trade Orgnisation (WTO) and recurred again more recently. The issue of washing chicken with chlorine has also been a point of divergence.

Now, after President Junker's visit to Washington, it appears that the EU and USA are going to get talking again. Access to the EU for soya is important as this is one of the products targeted by China in retaliation for the USA imposing tariffs on Chinese imports to the USA. It is also a sensitive product with the president because he counts a huge number of farmers among his constituency. In fact, earlier this week he announced a $12bn package of support for farmers hit by the imposition of tariffs.

$12bn support for farmers in US

This move is unlikely to get WTO approval – not that it matters to the US president – has also caused controversy in the US as it is seen as “welfare for farmers” with the presidents opponents pointing out that the best way to support farmers without state support would be to avoid creating trade wars that caused the hit on US agricultural exports in the first place.

In any case, the prospect of selling US soya to the EU at a time when it has had a tariff imposed in China, resonates with the US president for the moment anyway. For the EU, a cessation in tariff hostilities will come as a relief to the car industry and for Ireland the big threat was tariffs on our developing whiskey and cream liqueur industries which would have been a target as the EU had imposed a bourbon tariff on the USA in its first round of retaliatory tariffs.

More negotiations

The post-meeting press briefing in Washington suggests that the EU and USA will enter into a wider negotiation with a view to the removal of all tariffs. No reference was made to TTIP but from press reports it sounded like the presidents of the US and the EU were lining up a wide ranging negotiation.

Threat to beef producers

This will cause further concern for Irish beef producers who have lived with the threat of a Mercusor deal for several years. In any discussion, the USA will want generous quota access to the EU market for beef as it is consistently among the top three beef exporters in the world and the EU steakmeat would be particularly lucrative given that the US is an exporter of hindquarter cuts, but an equally large importer of forequarter cuts for manufacturing beef in mince and burgers.

Justification for farmer concern isn’t just a cry from the farm lobby. Studies carried out for the Irish Government in 2015 by Copenhagen Economics revealed that, while there may be some opportunity for Irish dairy and pigmeat in a trade deal with the USA, beef would certainly take a hit. At EU level this point was reinforced in a study by the EU’s own Cumulative Impact Assessment of a trade deal with Mercosur made the same point – there may be gains in dairy but the beef sector would pay a high price.

Issues ahead

However, the problems that caused deadlock with TTIP still remain. The US is unlikely to settle for a tariff quota confined ot hormone-free beef so the battle will resume on recognition of standards. Standards are currently Irish and EU beef producer’s best defence against beef imports but as we have noted the current US president makes and changes policy without much lead in. We need the EU negotiators to hold firm in defending EU standards and not be throwing the EU market open to anything that isn’t produced under the same conditions as EU farmers have to observe.