EU and US free-trade talks launched

[Tamas]

Sheilbh, why is lover agri tariffs not being good for eu farmers a concern? Of course it wouldn't be good. But if we go by that logic, we should put 500% tariffs on everything produced in the EU, that would greatly benefit the producers right?

[Admiral Yi]

Secondly in areas where US farmers could benefit there's already lower tariffs and the US farmers don't meet EU regulatory standards. They haven't found it worthwhile and I don't imagine that without tariffs it would make enough of a difference for them either.

You sure about this?  In the GMO thread it was mentioned that Soybeans are the only commodity GM crop on the market right now.

[Sheilbh]

You sure about this?  In the GMO thread it was mentioned that Soybeans are the only commodity GM crop on the market right now.

GM is just one part of the regulations. The USTR cites wheat, corn, soy and beef as areas where, despite low tariffs, the regulatory burden is so high that it inhibits trade.

Sheilbh, why is lover agri tariffs not being good for eu farmers a concern? Of course it wouldn't be good.

It's one of a number of concerns. I don't think lower agriculture tariffs would help consumers either because of the regulatory burden. From what I can see it would allow a few US whole foods producers and a few EU organic producers to trade more comfortably. Given that I don't think it would really benefit consumers or producers, and I think it would be the most politically contentious, I think it's best not included in the deal.

But if we go by that logic, we should put 500% tariffs on everything produced in the EU, that would greatly benefit the producers right?

Not really the point I was making.

[Admiral Yi]

GM is just one part of the regulations. The USTR cites wheat, corn, soy and beef as areas where, despite low tariffs, the regulatory burden is so high that it inhibits trade.

OK.  But "regulatory burden" is presumably subject to negotiation.

[Sheilbh]

OK.  But "regulatory burden" is presumably subject to negotiation.

I doubt it, to be honest. I can't see the EU dumping, for example, the rules on quality of life for livestock or banning hormone injections. Which do increase costs (my caff recently increased prices by 50p because of new EU regulations on egg production) but in my view are worth it.

This isn't an issue of feckless South v liberal North, like tariffs or subsidies either. I imagine the anti-GM, anti-hormone support is as strong in places like Germany and the UK as anywhere else.

All of which is why I think the EU and US would be better off avoiding the whole issue and focusing on the vast majority of our trade rather than letting agriculture distract it.

[Admiral Yi]

Can you see the EU dropping the quality of life restrictions on wheat?

[Sheilbh]

Can you see the EU dropping the quality of life restrictions on wheat?

The issue with wheat and grains in general is that the EU has a very strong policy on GM and some biotech stuff that's the norm in the US. A few of the products aren't allowed at all, but even the ones that aren't banned must be labelled at all stages - so even if the grain is used to feed cattle that needs to be labelled (on the front of the beef) as having been fed on GM grain. And the legal tolerance of even approved GM product is far lower.

There's other things the EU regulators don't think the American regulators do well enough too. So EU national regulators test American grains to test for prohibited substances or GM far more regularly than American regulators do (at the companies cost), they do the same to their own companies in fairness. And the countries that test more than anywhere else are the UK and Germany.

So around 70-80% of US soybean or cotton products are GM, and around 40-50% of grains are. So the cost of more regulators and the effect of labelling means there's been decreasing trade in most grains - despite pretty low tariffs.

[OttoVonBismarck]

You don't seem to know what the Stability and Growth Pact is.

I'd imagine only a few states in severe crisis wouldn't meet the criteria. Most U.S. States have balanced budget amendments and are not allowed to, by law, become significantly indebted.

Accounting would matter too, not sure the situation in Euroland, but our municipalities and counties (sub-state entities) can take on debt of their own that the State is not necessarily required to cover payments for if they default (in practice from history in some really bad cities in Michigan and Pennsylvania States generally do tend to assume these obligations when they are defaulted on.)

The highest debt state is New York, with 27.04% of GSP (gross state product) combined state and local debt, but it's only 11.16% State government debt. The highest for State only debt is Massachusetts at 18.35% of GSP, but Mass total State & Local debt is less than New York at 24.62%.

I wasn't able to quickly find any deficit figures for States nationwide, but generally State annual budget deficits are not a large percentage of GSP (I believe the Stability and Growth Pact asks for deficits at or below 3% of GDP?) Some State do regularly run deficits, and even the States with balanced budget amendments will run deficits sometimes because they can "realize" a deficit if revenue projections in the annual budget for the year end up not being accurate.

Typically when you hear about State budgetary shortfalls in the U.S. media that's not even deficit spending, that just means when the State legislature met all the spending they felt was necessary ends up not being affordable. They then have to decide how to close that gap--it's almost never through wholesale deficit spending as I think all but a small handful of States prohibit that by State constitutional amendment as I said earlier.

A lot of State fiscal problems are not debts, either. For example most States made lavish public employee retirement promises to all civil servants, teachers, and police officers in the 30s/40s and often waited until the 70s or 80s to reform those systems. These lavish benefits often allowed anywhere from 80-105% of final pay to be paid out as an annual pension benefit, with guaranteed COLA adjustments and retiree healthcare until 65 (when you qualify for Federal healthcare through Medicare.) These obligations are considered part of a State's long term "problems" but are not strictly speaking, debts. They aren't debts because by and large the pensioners have no legal claim to specific benefit guarantees and would have no claim to State revenues if the State changed the benefit payout to be lower. So basically they are promises that aren't binding like a debt. Politically it's very unpopular for a State government to cut any benefits for current pensioners, but legally, they pretty much can.

[Admiral Yi]

So around 70-80% of US soybean or cotton products are GM, and around 40-50% of grains are.

As I said before, this contradicts the article cited in the GMO thread.

[OttoVonBismarck]

Can you see the EU dropping the quality of life restrictions on wheat?

The issue with wheat and grains in general is that the EU has a very strong policy on GM and some biotech stuff that's the norm in the US. A few of the products aren't allowed at all, but even the ones that aren't banned must be labelled at all stages - so even if the grain is used to feed cattle that needs to be labelled (on the front of the beef) as having been fed on GM grain. And the legal tolerance of even approved GM product is far lower.

There's other things the EU regulators don't think the American regulators do well enough too. So EU national regulators test American grains to test for prohibited substances or GM far more regularly than American regulators do (at the companies cost), they do the same to their own companies in fairness. And the countries that test more than anywhere else are the UK and Germany.

So around 70-80% of US soybean or cotton products are GM, and around 40-50% of grains are. So the cost of more regulators and the effect of labelling means there's been decreasing trade in most grains - despite pretty low tariffs.

Isn't it strange a large collection of modern States prohibit something with no known health negatives whatsoever? It's like an entire continent buying into anti-vaccination conspiracies or something.

In any case though, even with totally synchronized regulations and lowered tariffs I'm not immediately sure there would be a flood of U.S. produce going to Europe. Agriculture is a major domestic industry for sure, but is less than 10% of total exports--smaller than that if you factor out non-food agricultural products which aren't typically subject to the same kind of regulations in any case.

[Tamas]

There is of course also the matter of anti-GM laws being a crime against humanity worthy of having their own Nurnberg trials

[Sheilbh]

As I said before, this contradicts the article cited in the GMO thread.

I've not read that article. Mine comes from a journal article on agriculture law from around 2002 or so. I'm not sure why there's a difference, I know the EU tolerance of GM is far, far lower (I think 0.9%). So your article could be using the US figure.

I'd add that I believe a lot of soy product is used to feed livestock. Under EU law they'd have to be labelled as GM too.

Isn't it strange a large collection of modern States prohibit something with no known health negatives whatsoever? It's like an entire continent buying into anti-vaccination conspiracies or something.

I'm not sure if we mean the same anti-vaccination thing - in the UK it was the MMR-autism link that drove people mental. But the key difference is that there's a real negative to not getting your children vaccinated. The negative here is just that Europeans have to pay a bit more.

In any case though, even with totally synchronized regulations and lowered tariffs I'm not immediately sure there would be a flood of U.S. produce going to Europe. Agriculture is a major domestic industry for sure, but is less than 10% of total exports--smaller than that if you factor out non-food agricultural products which aren't typically subject to the same kind of regulations in any case.

I agree. This is why agriculture should be avoided from the talks. The real gain is the trade everywhere else. Agriculture's a small part, with too many special interests that would suck the oxygen out of the talks on all the important issues.

[Admiral Yi]

I've not read that article. Mine comes from a journal article on agriculture law from around 2002 or so. I'm not sure why there's a difference, I know the EU tolerance of GM is far, far lower (I think 0.9%). So your article could be using the US figure.

Nope, I misremembered.  There is GM wheat.

Myth 5: Most seeds these days are genetically modified.

Actually, surprisingly few are. Here's the full list of food crops for which you can find GMO varieties: Corn, soybeans, cotton (for oil), canola (also a source of oil), squash, and papaya. You could also include sugar beets, which aren't eaten directly, but refined into sugar. There's also GMO alfalfa, but that goes to feed animals, not for sprouts that people eat. That leaves quite a lot of your garden untouched.

GMO versions of tomatoes, potatoes, and rice have been created and approved by government regulators, but they aren't commercially available.

From: http://www.npr.org/blogs/thesalt/2012/10/18/163034053/top-five-myths-of-genetically-modified-seeds-busted

I agree. This is why agriculture should be avoided from the talks. The real gain is the trade everywhere else. Agriculture's a small part, with too many special interests that would suck the oxygen out of the talks on all the important issues.

What an odd attitude to have.  Almost like you're keeping score by deals done rather than economic benefits.

Any trade deal worth its salt is going to have special interests opposed to it.  They're special interests because they have so much to lose from having their protected markets snatched away.

[Sheilbh]

What an odd attitude to have.  Almost like you're keeping score by deals done rather than economic benefits.

I thought my argument was the opposite. The political cost of including agriculture is huge, and probably enough to scupper a deal. The economic benefit of including agriculture is, in my view, minimal. So I think it's better to exclude it so we get the economic benefits from a free trade deal in all the other, far more important sectors.

Any trade deal worth its salt is going to have special interests opposed to it.  They're special interests because they have so much to lose from having their protected markets snatched away.

It looks like you're keeping a score based on political capital spent rather than economic benefits

From: http://www.npr.org/blogs/thesalt/2012/10/18/163034053/top-five-myths-of-genetically-modified-seeds-busted

As an aside from my understanding myth 3 is entirely accurate in the EU.

[garbon]

Organic food is crap.