Poultry case ‘key test’ in cutting EU-US trade barriers

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High-level delegations from the EU and the United States will meet next week (13 May) for talks on eliminating remaining regulatory obstacles hampering trade and investment between the two economic giants. A long-standing poultry dispute between the two sides is topping the agenda. 

The Brussels meeting will be the second of the Transatlantic Economic Council since it was set up in April 2007. Key items on the agenda include examining the impacts of the global financial crisis on trade relations, enhancing regulatory co-operation in the pharmaceutical, cosmetics and food sectors. 

The ‘poultry test’ 

The two delegations are expected to reach a compromise on resolving a long-standing dispute over EU restrictions to poultry imports from America due to health concerns. 

The EU poultry ban has been in place since 1997 because US poultry producers use a low-concentration chlorine to wash chickens before selling them – a practice not permitted in the EU. 

Speaking to journalists on 8 May, US Special Envoy to the EU Boyden Gray stressed that the ban is not based on scientific justification and pointed out that some EU producers actually use the same process for exports. 

The move is opposed by France and consumer groups, which say it would frustrate efforts to reduce bacterial infection rates, such as salmonella, in Europe.

Gray was nevertheless confident that the problem would be resolved shortly. “On chickens, Verheugen assures us it will be fixed. It won’t be fixed by Tuesday, but a fix will be in progress for a solution before the EU-US summit in Ljubljana in June.” 

He conceded that the loss of poultry exports to the EU is worth only “a couple of hundred million dollars”, a mere fraction of the annual €620 billion transatlantic trade, but said the issue represents an “important test” in convincing sceptics that the TEC can work. 

According to the US chair of the Transatlantic Economic Council, Daniel Price, a failure to reach a definitive solution to this issue before the next US-EU Summit would “call into question the ability of the TEC to deliver concrete solutions, which is why this matter should interest even those with no direct equities in it”. 

Indeed, as Enterprise Commissioner Günter Verheugen, who is the EU chair of the TEC, points out, the Transatlantic Economic Council is not the first attempt ot cut down the remaining non-tariff barriers between the two sides. But earlier efforts have failed to achieve any tangible results and there is much scepticism surrounding the current initiative. 

Chemical issues 

The United States also wants Europe to resolve what it sees as a “legal glitch” in the bloc’s new chemical regulation, known as REACH. According to Boyden Gray, the new rules, which require producers and importers of chemicals to register substances with the European chemicals agency and to prove that they are safe, threaten to disrupt approximately two billion dollars’ worth of US cosmetic exports to Europe. 

The main complaint is that the EU has pre-registered substances used in EU-made cosmetics but not those used in cosmetics made by other suppliers. 

“Non-EU based manufacturers of personal care products, which have been marketing safe, innovative products on the EU market for years […] risk having their products taken off of shelves in the EU” as of 1 June if they fail to meet the “burdensome registration requirements of REACH,” lamented Daniel Price. 

‘Over-the-top’ US scanning requirements

For his part, Commissioner Verheugen said a key concern the EU would be raising is a draft US bill that would require 100% of US-bound containers coming from the EU be scanned by European port authorities. The US says the new rules are needed to avert terrorist threats, but the EU insists the regulation is “unnecessary and unrealistic” and “would lead to major trade disruptions” (EURACTIV 22/04/08).

Certifying EU electrical products 

The EU also has raised concerns over US regulations governing the certification that certain electrical products are safe for the workplace. It wants the US to adopt rules that would allow manufacturers to self-certify the goods’ conformity with safety requirements. 

“We are looking for a path forward to address the EU’s concerns,” assured Price. 

Third country headaches 

The two sides will also seek to better coordinate their individual efforts to tackle market access and product safety issues in third countries, such as China and India. 

A key issue is that of opening up foreign markets to European and American investments. “Some countries put certain sectors off limits to foreign investment or reserve the right to block particular investments for reasons other than national security. Other countries are considering expanding the restrictions they already have in place. This problem affects US and EU companies alike, and we should work together to address it,” said Price. 

The same approach goes for product safety, where the two delegations will also seek to better coordinate their efforts. In a resolution on the TEC adopted on 8 May, the European Parliament stressed that ensuring that China and other countries raise their production standards to meet EU/US safety requirements, in particular for toys, should be a top priority. 

Weak dollar on the agenda

According to Boyden Gray, the current record weakness of the US dollar and its impact on trade between the two sides is likely to be discussed informally at the meeting. 

European exporters fret that the strength of the euro against the dollar is making it harder for the region’s exporters to compete globally. But Gray stressed that Europe is benefiting from the strong euro, especially as it helps to temper the hike in oil prices. “For Europe, the increase in the price of oil is no way near as damaging as it is for us. You can look at it all in different ways but it balances out in the end,” he added. 

The Transatlantic Economic Council was set up in April 2007 at the initiative of German Chancellor Angela Merkel and US President George Bush in a bid to reinvigorate EU-US economic relations. 

The aim is to clear away technical regulations and standards that substantially raise costs for companies wishing to trade and invest across the Atlantic (EURACTIV 02/05/07).

It is hoped that the removal of restrictive regulations in areas such as financial-market regulation, pharmaceuticals, patents and intellectual property law could add as much as 3.5% to both EU and US GDP – a much-needed boost, at a time when global trade talks are stagnating and China and India are emerging as the economic superpowers of the future (EURACTIV 05/01/07). 

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