FREE TRADE AGREEMENT WITH NEW ZEALAND – WHERE IS THE GAIN FOR THE EU?

The European Commission has recently announced a renewed push to conclude the negotiations of a Free Trade Agreement (FTA) with New Zealand and Australia.

The New Zealand case is paradigmatic, but what Farm Europe outlines below can be largely said about the FTA with Australia.

New Zealand has no tariffs on imports of most products. Already today the EU can export to New Zealand free of customs duties. In agriculture only a few products face a low 5% tariff.

New Zealand is a large and competitive exporter of agriculture products, which account for 80% of the total exports of the country. In 2021 New Zealand exported 28 billion euros worth of dairy, eggs, meat, fruits and nuts, wine, and other agriculture products.

To the EU, New Zealand exports mostly agriculture products, whilst importing mostly industrial goods. The EU currently benefits from a positive trade balance with New Zealand.

Which will be EU’s gains with the FTA? It will hardly increase its exports, as New Zealand tariffs are either zero or very low. Only New Zealand can benefit, in the agriculture sector in particular, as EU’s tariffs are currently much higher.

The inevitable result of the FTA would be more New Zealand exports of dairy, meats, wine, fruits, and so on, and no further EU gains in the New Zealand market.

Not even in the industrial area should the EU expect significant trade advantages, as only a few products have a 10% tariff, most others are already duty free. And it should not be forgotten that New Zealand has FTAs with China, Hong-Kong, Singapore, Taiwan. Our agriculture sector will suffer for no good.

This FTA is thus not balanced in terms of gains and losses. It departs from a pragmatic approach to trade, and instead dwells entirely on an ideological approach that sees free trade as a good thing irrespective of its actual impacts.

LIVESTOCK IN THE EU – PERIODIC NEWS

The economic impact of the Russian-Ukrainian war continues to cause concern. The livestock sector is bearing the brunt of the general price increase, with energy costs and rising feed and fertiliser costs particularly affecting the sector.

World dairy prices have recently fallen. This decline follows high price levels, and is also partly due to disposal problems in China, linked to the Shanghai containment.

African swine fever continues to spread in Europe. With cases reported near the French border, British pork producers have called on the government to introduce import controls to limit the risk of introducing the disease.

The end of the second wave of avian flu marks the return of free-range eggs. This health crisis has generated considerable costs for professionals, due to production stops and the closure of export markets, but also for the governments which are compensating farmers for the animals slaughtered and the economic losses incurred. In response to these disease outbreaks, the Commission and the Member States are called upon to intensify their efforts to develop vaccination strategies for the prevention and control of HPAI.

According to a Commission report, CAP measures have improved animal welfare in some cases in some regions but have failed to bring about a significant change overall. The requirements defined at EU level under cross-compliance have primarily improved animal welfare in those regions and member states that only partially met the EU welfare directives.

Brussels is considering mirror clauses ‘on a case-by-case basis’. The Commission states that the European Union can “take autonomous action where necessary to address global environmental concerns or animal welfare issues”. These avenues remain controversial within the WTO (risks of retaliation, control mechanisms, tariff conditionalities, etc.). Nevertheless, the European Commission could adopt mirror measures in the meat sector (antibiotics, deforestation, animal welfare).

The France Carbon Agri Association (FCAA) wishes to expand its scope to include all sectors. Numerous methods are being developed within the Low Carbon Label (pig farming, poultry farming, small ruminants, arboriculture, viticulture, etc.) and should soon be able to be integrated into FCAA’s calls for projects.

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LIVESTOCK IN THE EU – PERIODIC NEWS

The crisis in Ukraine and its geopolitical consequences are leading to an increase in feed prices, production costs, energy and gas costs, which is putting a strain on European livestock farms. States continue to provide emergency aid to support farmers. Spain, which is particularly concerned by the consequences for monogastric farms, has set up several aids.

In the beef sector, a drop in meat production and a stagnation in milk production is expected. The pig sector is experiencing a delicate situation, with a drop in meat prices and the consequences of the international situation. In the poultry sector, the outbreak of highly pathogenic avian influenza has led to the slaughter of 15 million animals in France, which encouraged the Commission to address the issue of vaccination.

Tensions on the feed market – particularly maize – are a reminder of the structural deficit between supply and demand in the EU. A drop in world production is also expected next year.

Europeans are therefore putting in place measures to allow the production of this food. In the short term, with stocks accumulating in Ukraine, the Commission is trying to find other ways than the inaccessible Black Sea ports to import Ukrainian grain.

On the link with the ecological transition, the Industrial Emissions Directive and the recent rule to take account of livestock farming considered as industrial are criticised for the apparent disconnection with reality that it demonstrates.Finally, other concerns relate to animal welfare, to a new European Citizens’ Initiative criticising the aid allocated to livestock farming and to the development of non-meat alternatives on the market (vegetable alternatives and cultivated meat).

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NEW GENOMIC TECHNIQUES: NGOS KEEP MEDIA ATTENTION HIGH

The scientific community has welcomed the results of more than 20 years of research that led to the completion of the sequencing of human genome. The discovery corrects thousands of structural errors in the previous reference genetic material.

In the EU, NGOs (notably in Germany and Austria) are keeping the media attention high on the matter of ‘de-regulation’ of GMOs restrictions, with the German secretary of state for agriculture taking clear position to defend the status quo. Belgium, on the other hand, shows more complacent position towards NGT by allowing three new gene edited maize varieties for field trial, while in the UK field experiments have been allowed for barley varieties.

Outside the EU, India allows for derogation of biosafety assessment of two gene edited crop varieties, and in the US a field experiment aiming at reducing the population of viruses-carriers mosquitoes through modified mosquitoes has shown positive results.

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NUTRITION & HEALTH POLICIES: EFSA APPROVES NUTRIENT-PROFILING FOR FUTURE FOP LABEL

EFSA has published its final scientific opinion on nutrient profiling, an opinion that will influence the dossier of the front-of-package labelling initiative that the Commission is supposed to advance during the third semester of 2022. Furthermore, the same EU agency approved for human consumption a ‘novel food’ consisting in new protein-rich supplement.

While a study on the prices of fruit and vegetables finds out that consumers buy 15% less of them because of its 40% increased price compared to their marginal cost, in Germany, the federal minister is considering lowering to zero the VAT on fruit and vegetable as a response to the increase in food prices and incentivize their consumption within the framework of an healthy diets. Meanwhile, the Commission has opened feedback on alcoholic beverages taxation.

Outside the EU, Barbados has doubled its sugar-tax levy on soft drinks, and in the UK, the government has to deal with a legal case where it has been cited in court by Kellogg’s accused of illegally applying the rules on the restriction of HFSS foods. New research finds links between allulose/edulcorates and increased risk of cancer.

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FARM TO FORK NEWS: FOOD SECURITY DIVIDES THE COMMISSION

While the conflict between Russia and Ukraine is going on in the East of Europe, agricultural markets are still suffering its consequences, notably in the price raise of fertilizers and the possible shortages on the cereal markets. The EU institutions are discussing alternative solutions to the short-term problems that the conflict is creating within the EU agri-food chain following on last month’s Commission declaration of ‘Food Security’. Commissioner Wojciechowski repeatedly stressed the importance of reducing fertilizers dependency, while EU and national agricultural organizations call on the Commission for further support of the chain and derogations from the environmental obligations. The Executive Vice-President of the European Commission contested that the war in Ukraine has any impact on food security in front of the ENVI committee of the European Parliament, asking the MEPs for continued support for the Farm to Fork.

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WINE NEWS: WAR THREATENS THE SECTOR

In the face of the conflict in Ukraine, the month of March was punctuated by government announcements of new sanctions against Russia, and decisions by businesses and citizens to boycott certain products from Russia. The conflict is nevertheless threatening the production of certain crops, notably barley, for which producers fear a shortage and warn of a future price increase. For its part, the UK continues to open up to the international market, signing a free trade agreement with New Zealand, and removing tariffs on US bourbon imports.

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LIVESTOCK IN THE EU – PERIODIC NEWS

The crisis in Ukraine is having a major impact on the livestock sector, particularly through the rise in input prices and the shortage of certain feeds. The first consequences are higher production costs on all markets and higher inflation. Thus, not only farmers, but also processors in the sector and consumers are affected by this crisis.

To address these economic consequences, the European Commission presented an action emergency plan with short- and medium-term actions on March, 23^rd.

In the livestock sector, several measures are being considered taking into account climate issues. In particular, Germany has made progress on the mandatory labelling of livestock products, which it intends to introduce this year.

The consequences of the Commission’s proposal to extend the IED (Industrial Emissions Directive) to the European level, in particular for a large number of livestock farms, are being debated and have yet to be measured.

Nutritional recommendations remain a concern for the livestock sector. The results of a study on the consumption of red meat are highly debated and an Italian association is contesting the Nutri-score system, which, judged to be ‘too simple’, risks devaluing certain products, including PDO cheeses.

Finally, following the approval of the report on animal welfare by the European Parliament, the results of a Commission consultation are feeding into possible future developments in the harmonisation of animal welfare rules in the EU.

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NEW GENOMIC TECHNIQUES: A TWO-SPEED EUROPE

While in Italy and in France, the scientific community is calling on their governments to ease the regulation on plants derived from new genome techniques and that times are ready to move forward, in England the Parliament has approved legislation that ease the acceptance of gene-editing field trials, and Kenya adopts guidelines on genome-editing techniques to allow for development of new varieties. In Switzerland, the moratorium that allows for the growing of gene-edited plant has been extended until 2025.

German NGOs plea to the Commission to better regulate GMO chickens, expressing concerns that transgenetic eggs will be allowed to be sold in the EU without undergoing the mandatory approval process.

In the USA, gene-edited cattle get approved for selling for human consumption, after salmon and pigs.

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FARM TO FORK NEWS: WAR IN UKRAINE HINDERS F2F AND DIVIDE INSTITUTIONS

The war in Ukraine has opened discussions on targets of the Farm to fork strategy, with institutional figures taking opposite sides. Notably, the Commission (Timmermans, Kyriakides) is still defending the objectives of this strategy, arguing that the renewed call on EU independence from, for instance, fertilizers and pesticides imports is very topical and that the F2F will, in fact, help in reaching it. This position is shared by many NGOs and the Greens in the EU Parliament. On the opposite side, several MEPs from the Agri Committee (amongst which its chair, Lins), together with farmers organizations are calling to pause the ambitions of the strategy to give the production reality time to re-adjust to the new market situation. Commissioner for agriculture seemed leaning towards the latter option.

The Commission, in response to the war, has allowed derogations from sustainability restrictions, such as allowing MS to cultivate fallow lands in environmental protected areas to increase the yields, without critics from environmental organizations. It has also paved the way for more enhanced flexibilities in the approval of the strategic plans tabled by the Member States asking them to take into account the new geopolitical context. In addition, the President of the Commission step up its involvement on the file asking the first executive VP Timmermans to hold on the proposal on pesticides and and biodiversity.

While the Commission is working on its proposal on the methodology on which the green claims should be based, the Product Environmental Footprint (PEF) calculations, has raised some concerns from civil society groups, accusing it not to be fit for purpose to assess agricultural products.

In the meantime, the vote within the European Parliament on the resolution on food security in the context of the war in Ukraine triggered a political debate on the relevance of the Farm to Fork’s objectives. 4 key amendments were tabled but the EPP contesting the principles of the F2F. 2 of them were rejected by a very small majority, 2 others went through including one asking not to implement the 10% Ecological Focused Areas target foreseen in the F2F considering the new context. During another vote, the 25% target for organic farming has also been challenged.

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