Fears rise of new trade crisis over food imports

Date: 28/11/1996

By Michael Mann

CONTINUED failure to conclude a series of veterinary agreements with key food exporters could plunge the EU into a new trade crisis from the start of next year.

Intense diplomatic efforts are under way in an attempt to meet the 1 January 1997 deadline for a string of bilateral plant and animal health accords but, after two years of talks, time is now running out.

Although they are keen to play down the potential danger of stalemate or of missing the cut-off date, US officials warn that exports to the Union worth over 700 million ecu could be in jeopardy.

On 1 January, a new directive is due to come into force in the EU harmonising rules on the imports of animal products ranging from dairy and egg derivatives to frogs' legs and rendered animal waste used in pet food.

With this deadline in mind - and the need for GATT signatories to abide by the international 'sanitary and phytosanitary' agreement - the Commission has been trying to negotiate 'equivalency agreements' with other countries.

Under such accords, both sides would undertake to recognise that, although different, their hygiene standards are equivalent and their exports are therefore safe for human consumption.

But American officials claim the minutiae of the new EU rules make it virtually impossible for the US and other countries to comply. They talk of US premises even having to bring the colour of their walls and the type of water taps into line with European expectations.

Although the differences have been gradually whittled away during exhaustive negotiations, the BSE crisis has thrown a large spanner into the works.

“Until April, we were close to an agreement. Since then, we have been presented with a moving target. Since the latest BSE problems began, we have had to put up with new legislation virtually every week,” claimed a US diplomat.

But the European Commission insists that it cannot allow special dispensations for third-country governments. “Finland and Sweden do not have BSE, but they still have to obey the same rules as France, which does. We would have great difficulty allowing in US products which were not seen to reach the same standards,” said an official.

The ramifications of a failure to agree could be far-reaching. Washington believes pet food exports worth more than 230 million ecu, fat and tallow exports totalling more than 150 million ecu and rendered meat products worth about 80 million ecu are at stake.

Damage to other trade could see the bill rise as high as 700 million ecu.

The US is not alone in its concern. In 1994, the Commission was talking confidently of negotiating 110 agreements. Two years later, only one - with New Zealand - has been completed, and even that looks unlikely to be ratified in time.

Canada also fears major disruption to trade in fisheries exports worth around 230 million ecu and animal products worth 120 million ecu, including pet food, tallow, bonemeal, hides and skins. “A deal is close, but we will be faced with a real problem unless the 1 January deadline is postponed,” said a Canadian official.

Australia's Primary Industries Minister John Anderson met Agriculture Commissioner Franz Fischler last week to discuss the issue and emerged sounding relatively upbeat.

“I do not believe there will be a stop in trade. The question is whether there will be some impediments,” he said.

But one US official claimed EU-US relations were just about as bad now as at any time during the Uruguay Round world trade negotiations, and stressed that the pressure in Washington to retaliate against trade disruptions would be intense.

Regular talks will continue until the end of the year. Key dates will be a meeting of chief veterinary officers on 5-6 December and of EU farm ministers beginning on 16 December. Agriculture will also loom large at the EU-US summit in Washington on 15-16 December.