EU Commission finds positive impact of trade deals on agri-food sector

The EU trade agenda is set to have an overall positive impact on the EU economy and the agri-food sector, according to a new study published by the European Commission.

Trade agreements are due to result in substantial increases in EU agri-food exports, with more limited increases in imports, creating a positive trade balance overall.

The study also confirms that the EU’s approach to grant a limited amount of lower duty imports (through tariff rate quotas) is the best approach in terms of protecting specific vulnerable agri-food sectors in the EU.

Trade agreements

The study carried out by the commission’s Joint Research Centre (JRC) covers the cumulative effects of 12 trade agreements on the agri-food sector by 2030, an update of a 2016 study.

The study includes trade results for the agricultural sector as a whole, and sector-specific impacts on trade, producer prices and production volumes.

It covers free trade agreements (FTAs) recently concluded or implemented by the EU, as well as trade agreements on the EU agenda.

It includes two scenarios, an ambitious one (full tariff liberalisation of 98.5% of all products, and a partial tariff cut of 50% for the remaining products) and a more conservative one (full liberalisation of 97%, and 25% tariff cut for the others).

Environmental and climate effects do not fall within the scope of the study, including any Green Deal related initiatives.

Main findings

Throughout the study, findings are for 2030, with the different scenarios compared to the reference scenario of business as usual. For both scenarios, the results show a positive impact on the EU agri-food trade balance by 2030.

While EU trade partners gain market access in the EU, it also allows EU exports to grow significantly. EU agri-food exports to the 12 FTA partners are set to increase by 25% (conservative scenario) and by 29% (ambitious scenario), while imports increase by 10% (conservative) and by 13% (ambitious).

This corresponds to the EU total agri-food exports increasing by €4.7 billion (conservative) and by €5.5 billion (ambitious), and total agri-food imports by €3.7 billion (conservative) and €4.7 billion (ambitious).

The study confirms that the EU agricultural sector can benefit from the EU trade agenda. A comparison of the 2016 versus 2021 cumulative impact studies shows the effectiveness of tariff rate quotas in mitigating impacts on sensitive sectors such as beef, rice or sugar.

Reaction

Commenting on the study, executive vice-president responsible for trade Valdis Dombrovskis said: “The EU has always stood for open and fair trade which has enormously benefitted our economy, including agricultural producers.

This study shows that we have been able to strike the right balance between offering more export opportunities to EU farmers, while protecting them from potential harmful effects of increased imports.

“Supporting the EU agri-food sector will continue to be a key element of the EU’s trade policy, be it through market opening, protecting traditional EU food products or defending it against dumping or other forms of unfair trade,” he said.

Furthermore, the commission said that an ambitious future Common Agriculture Policy (CAP), supporting innovation, sustainability and the competitiveness of the EU farming sector, can also contribute to minimise any negative outcomes of trade negotiations while reinforcing the positive ones.