The United States has the opportunity to upgrade its food exports to increase revenues for farmers, but for that to happen it needs to negotiate a comprehensive trade deal with Europe. For reference, America exports more food to Japan, a market of 125 million consumers, than to the European Union, which holds (with its associated trade partners) 450 million inhabitants. While both the Obama and Trump administrations failed to conclude an agreement with Europe, South American nations are about to conclude a comprehensive agreement.
Following the return of Luiz Inácio Lula da Silva to the Brazilian presidency, the European Union expects to finally conclude its trade deal with the South American common market, Mercosur. It had taken the Europeans two decades of negotiation to reach a political agreement for a free trade deal on food, but the agreement was frozen in 2019, given both Jair Bolsonaro’s unwillingness to reach a compromise on environmental protections in the Amazon as well as French and Irish skepticism on the potential competition by Argentinian beef. With Lula back in office, the deal has a good chance of being approved before the EU elections take place next year.
The time is right for new trade deals with Europe. The old continent experiences a dangerous war in Ukraine that not just threatens the political stability of the region but also re-aligns trade policy away from authoritarian regimes. For too long, Europe’s political leaders have believed that what defines high food standards must be stringent policies on crop protection: phase-out chemicals, reduce livestock, remain skeptical of genetic engineering, and import as little as possible. Now that Ukraine, Europe’s bread basket, is facing a war unprecedented in the twenty-first century, things are changing.
Before February 2022, which marked the beginning of Russia’s aggression, Brussels planned on an ambitious sustainability revamp of its food policy. Now it is confronted with a re-think. Lawmakers have criticized the EU’s planned “Farm to Fork” reform for increasing food prices through reduced productivity. After two years of significant supply chain disruptions during the coronavirus pandemic, it has become clear that even the existing food system lacks resilience, and that the planned reduction in farmland use and livestock capacities will not be beneficial.
This opens the door to a renegotiation of what started in 2012 as the Transatlantic Trade and Investment Partnership (TTIP) agreement. TTIP would have liberalized one-third of global trade and have boosted, according to the European Commission, the European and U.S. economy by over $200 billion in GDP. The deal failed to be adopted on the one hand because of Europe's skepticism over American food regulation, as well as the hostility by President Donald Trump toward trade agreements negotiated by the Obama administration. Trump’s protectionist policies weren't just off-putting to Democrats, they should also have repulsed traditionally pro-free trade Republicans.
While the European efforts of tightening the regulatory framework on agriculture look discouraging for future food talks, the White House should instead see the current situation as an opportunity. USDA has suggested a regulatory roadmap, the Agriculture Innovation Agenda, which looks to technological innovation in high-yield farming as a solution to the environmental challenges that face the sector, and there is nothing wrong about both blocs trying to achieve a more sustainable food model at different speeds and with different methods. In fact, food trade would underline to what extent high-yield farming is essential to preserving biodiversity—doing more with less, at better prices for consumers.
There will be hurdles. U.S. Secretary of Agriculture Thomas Vilsack has already had conversations with his European counterparts, in which he explained that the American farm sector does not prescribe to the same level of precautionary regulation as the Europeans. That said, things have changed since the 2010s. Despite there being organizations that still try to scare consumers with American “frankenfood” and farmer groups keen on using protectionism to prevent European consumers from having access to more choices in the supermarket, consumers are now more sensitive than ever to food prices. Food price inflation in the European Union is at a record 18 percent—a situation unlikely to normalize in the coming months.
Even and especially with Republicans controlling the House, growing the U.S farming sector while supporting European allies at a crucial moment through trade should be a bipartisan priority. The Biden administration can do well by the American farm sector by embarking on renewed negotiations with the European Union, setting an example for innovative agriculture, and creating economic opportunities for all.
Bill Wirtz is the Senior Policy Analyst at the Consumer Choice Center. He published No Copy-Paste: What Not to Emulate from Europe’s Agriculture Regulation.
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