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View from Washington By Steve Kopperud, Policy Directions, Inc. Finding a Formula for Trade Success I’ve been accused of being a cynic. I don’t understand why; perhaps it comes with having spent 25-plus years in Washington, DC, dealing with Congress and various presidential administrations. Let’s set the record straight: I love everyone, trust everyone, and believe everyone is working for the greater good in all things. However, this round-headed midwestern view of my fellow citizens disintegrates when someone mentions the Transatlantic Trade and Investment Partnership (TTIP), known as the United States (US)-European Union (EU) bilateral trade negotiations. This endeavor strains credibility; it inspires cynicism and skepticism. Make no mistake: I’m 110 percent in favor of truly liberalized and unfettered trade between the United States and EU. It’s a win-win, if it can be achieved. And it can be achieved, but it’s going to be a very heavy lift. While in theory a tariff-free, hassle-free bilateral trade bridge between the United States and Europe makes perfect sense, there is no greater love-hate relationship as intense as that between the United States and EU when it comes to trade broadly. When you factor in the parochial challenges of ag and food trade, acceptance of the science and technologies that underpin one nation’s production over the other, how to provide an “income safety net” for farmers, or the simple notion of “safe” versus “unsafe,” it seems we’re not just occupying different continents, but different planets. These trade talks represent a zero sum game; it’s all or nothing, with both the United States and EU agreeing a successful outcome is a full-blown bilateral trade package blessed by both governments and covering the four corners of both economies. Recognizing there will be various specific trade or product sectors to be dealt with because of their unique or existing regulation by either aide, broadly there will be no side deals or industry/product specific bilateral agreements. US agriculture has been emphatic to both its government and the folks on the other side of the pond; all ag/food issues/goods/services are on the table or the deal is off. However, experience watching US-EU sparring at the World Trade Organization (WTO), the draconian manner in which the EU sets its standards, definitions, and directives, the hit-or-miss actions of EU members when it comes to accepting government instructions, and the United States’ overall zeal to bring enlightenment to the known world begs the question: Is this pact achievable or are we wasting time, manpower, money, and electrons chasing something that cannot be caught? US and European negotiators held their first session on July 8 and they’ll continue this effort for the next several months, at least. The US goals of the talks are: to further open EU markets; pump up reciprocal “rules-based” investment; eliminate all tariffs on trade; take on costly “behind-theborder” non-tariff barriers – including sanitary/phytosanitary hurdles – impeding the flow of goods, including ag products; reduce the cost of differences in regulations and standards by “promoting greater compatibility, transparency, and cooperation while maintaining our high levels of health, safety, and environmental protection”; create new rules on intellectual property; and promote small and medium-sized companies. Here are the economic realities from which the negotiations to reach a US-EU bilateral trade agreement begin. The United States and EU represent the world’s largest and most complex economic relationship, representing fully one-third of the planet’s total trade in goods and services and nearly 50 percent of global economic output. In 2012, trade between the two blocs racked up $2.7 billion a day, supporting about 6.8 billion jobs on both sides of the Atlantic, according to the US Trade Representative’s (USTR) office. Yet it’s a bit of a lopsided relationship. Nearly 21 percent of all US-produced goods and services are exported to the EU, but only 19 percent of everything the United States imports comes from the EU. The United States buys about 17 percent of the goods and services produced in the EU, and US goods represent about 11 percent of Europe’s total imports. Last year, this represented a $115.7 billion US trade deficit with the EU, up nearly 16 percent from 2011. Meanwhile, US exports to the EU in 2012 were worth $265 billion, down 1.2 percent from the year before, but imports from Europe by the United States were valued at $380.8 billion, up 3.4 percent from 2011, and a whopping 67 percent higher than in 2000. For agriculture, the United States shipped products to the EU worth about $10 billion in 2012, making the EU this country’s fifth largest ag trade partner. The main products shipped from US shores to theirs include $1.7 billion in tree nuts, $1.5 billion in soybeans, $514.9 million in processed fruits and vegetables, $492 million in wine and beer, and “feeds and fodder” – mostly unprocessed minor grains and oilseeds – clocked in at $405.5 million. However, the United States bought $16.6 billion in ag products from EU countries, making it the United States’ second largest supplier – after Canada – of ag imports. Telling is the major products the United States imported, including $5 billion in wine, $1.9 billion in “essential oils,” $1.1 billion in snack foods, $934 million in processed fruits and vegetables, and “feeds and fodder” represented $832 million. However, no matter the noble and economic goals of this endeavor, it’s fair to say trade battles between the two industrial giants over time have their genesis in the classic philosophical and cultural differences that spawn all conflicts, armed or verbal. Respective domestic rules and regulations reflect those philosophies and cultural biases as these are the primary ingredients of the homegrown politics that spawn the rules. There are great opportunities in reasonable men and women sitting down together to fix what’s broken or to enhance a successful endeavor. However, the big problem 6  October 2013  Render www.rendermagazine.com


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