Is the European Union a progressively-minded bulwark of the rules-based trading system, or a trade leviathan which reverts to unscientific ruses to keep competitors out of its most sensitive markets?
The answer appears to be that it is both of these things simultaneously – at least if the latest World Trade Organization review of EU trade policy is any guide. As one of the largest and most economically complex members of the WTO, perhaps such an equivocal assessment is unsurprising.
However, this week’s policy review process in Geneva will have left the EU in no doubt that while Brussels may claim to be a model player in the global trading system, support for this point of view among other countries is, to put it mildly, heavily qualified.
Allies of the EU in the battle to preserve the rules-based system against the predations of unilateralists such as the US were keen to praise Europe’s commitment to keep playing by the rules.
But it was Brussels’ interpretation of some of these rules that prompted criticism.
‘Unjustified barriers’ to United States agricultural exports
Agri-food represents one of Europe’s most heavily protected and regulated sectors, so it is not surprising that SPS and agricultural market access issues featured prominently in WTO members’ criticisms of EU policy.
Leading the attack in Geneva was the United States, whose WTO Ambassador, Dennis Shea, condemned the “unjustified EU barriers to our agricultural exports” arising from Europe’s famously precautionary approach to regulating potentially hazardous substances such as pesticides. Indeed, in the latest annual report on Foreign Trade Barriers, the USTR’s litany of complaints on alleged EU protectionism on agriculture and food takes up a full 12 pages.
The EU restricts or bans the use of some crop protection products which are viewed as posing a possible threat to the environment or human health.
But the US’s biggest problem with the EU approach is that such bans are generally applied on the basis of ‘hazard’ rather than ‘risk’ – i.e. no account is taken of factors such as the likely level of exposure or dosage which may mean that even intrinsically dangerous products can be used safely.
‘Maximum Residue Levels’ under fire
A more common accusation is that the EU has not actually banned residues of a given agrochemical, but has set its minimum residue level, or MRL, at such a low level that imports become commercially unviable.
Over the past year, the EU has received complaints about a series of MRL adjustments, some of which are seen as disproportionately affecting developing countries.
These include MRLs for imazalil, a widely used fungicide used in the cultivation of bananas, which has caused alarm in Colombia, Costa Rica, the Dominican Republic and Ecuador; and for lambda-cyhalothrin, a pesticide used in tea plantations in China and elsewhere, for which the EU has lowered the MRL from the previous limit of 1mg/kg to the ‘trace’ level of 0.01 mg/kg.
The EU stands accused of unfairly blocking trade by automatically setting MRLs to a very low level in cases where there is an absence of scientific data on whether or not a product is safe – in application of its precautionary principle.
But also under fire from the US, and from other WTO members, were aspects of EU policy in other areas such as biotechnology, pathogen reduction treatments (read: ‘chlorinated chicken’), and veterinary medicines. In the latter case, a new directive coming into effect in early 2022 may end up effectively banning imports of meat or dairy products from any country whose policies on controlling antibiotics in veterinary treatments are not aligned with those of the EU.
EU ambassador defends EU SPS rules
Within the EU, of course, such stances are celebrated as evidence of Europe’s ‘high’ standards of food safety, and indeed the European Food Safety Authority and associated agencies are regularly berated by campaigners by not being strict enough on pesticides and similar products.
The EU Ambassador to the WTO, João Aguiar Machado, showed this week in his response to the policy debate that the EU had no intention of mending its ways.
“Our legislative regime is transparent, predictable, based on international standards and the best available science. All the EU SPS measures are notified according to our international obligations,” he told his colleagues, pointing out also that the EU is the second largest agricultural importer in the world.
Machado also made the claim that the EU’s maximum residue levels for pesticides were “more than 70% aligned” to those in the UN’s Codex Alimentarius. “According to the information available to us, this is one of the highest levels of alignment anywhere,” he declared.
But underlying the technical arguments of the EU’s trading partners is a concern, voiced forcefully by the US ambassador, that the EU is successfully ‘exporting’ its regulatory frameworks to the rest of the world via a growing network of regional trade agreements.
“This approach will have global consequences, including impeding the ability of least developed and African countries to modernize their agricultural systems to feed a booming population and develop their economies,” Shea was quoted as saying at the review meeting.
Concerns over ‘tariff rate quota’ administration
For other WTO members, notably Canada, Australia and New Zealand, the EU’s agricultural tariff barriers were of as much concern as those of the non-tariff variety.
The simple average of EU agricultural tariffs is measured by the WTO at 14.2%, compared with an average tariff of 4.2% on non-agricultural goods. Such tariff weighting in favour of agriculture is common among WTO members, but the EU also has 107 tariff rate quotas in its WTO schedule, of which the majority relate to sensitive agricultural products.
The way these TRQs are administered represent a concern for many of the EU’s suppliers. But Machado was happy to defend the EU approach, saying that the bloc always seeks to ensure “smooth trade flows and the lowest administrative burden.”
He also denied that the EU’s TRQ management system was the reason why so many quotas were frequently under-filled, claiming that “fill rates are determined by prevailing economic conditions.”
Unsurprisingly, a large number of members brought up the issue of Brexit, and in particularly the highly-contentious move to split TRQs between the UK and the EU27. Requests for ‘consultations’ on this question have been lodged by around 20 WTO members, who remain angry at what they see as a resulting loss of market access.
Fisheries subsidies under fire
Also on the agenda were the EU’s subsidies to the fisheries sector – a highly topical subject given the current push for a multilateral deal to discipline such payments at the June WTO Ministerial in Nur-Sultan.
Many members criticised the EU for its proposal to maintain or increase fisheries subsidies in its draft Maritime, Fisheries and Aquaculture Fund for 2021-27. New Zealand was among the countries lamenting EU plans to re-introduce subsidies for purchase, renovation and new build of fishing vessels.
The US also condemned the EU for “not only proposing ways to maintain and even increase the subsidies without limits, but also suggesting that the WTO should explicitly label them as ‘green’”.
But, in an intervention which echoed the current debates in the fisheries negotiating group, Machado said the EU was “proud that a vast majority of fisheries subsidies provided in the EU are positive subsidies that actually improve the sustainability of stocks.”