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EU Trade Update

Figures published by the European Commission highlight that 2017 was another record year for EU agri-food exports, which reached a value of €137.9 billion in 2017 (5% growth on 2016). Among dairy products, milk powder exports increased in value by 26%, (+€926 million) and infant formula exports were up by 11% (+ €722 million). The US and Russian markets, as well as several Asian countries, including Japan, China and Hong Kong, remain the most prosperous (see full figures here: https://goo.gl/sx7NFu ).

With regard to on-going trade discussions, the Mercosur negotiations continue drag on, with officials concluding without an agreement following two weeks of technical talks in Paraguay in February. Trade Commissioner Cecilia Malmström however told MEPs on Wednesday that it is close to being finalised, with room still for another round of negotiations in March, that could culminate in a Ministerial Meeting, if enough progress is made. It is believed that dairy, as well as EU offensive interests in cars, remain the key sticking points, with Brazil unwilling to move on EU market access demands and technical rules.

The Mexico FTA is also believed to be close to being finalised, with hopes that the next round of negotiations, foreseen for April, will conclude with a deal. Six chapters, including good regulatory practices, publication and administration and sanitary and phytosanitary measures have been completed. It is believed that the deal will include an agreement on significant market access for EU SMP.

While the FTA with Japan is on track to provisionally enter into force by early 2019, with legal clearance due before July 2018, its signature after summer, ratification by the Japanese Parliament in October and its adoption by the European Parliament in early 2019. The Japanese agreement with 10 Pacific countries, TPP, is expected to be signed this month, and the implementation will take place when 6 countries ratify it.

Finally, United States President Trump’s plans to impose punitive 25% duties on steel and 10 % duties on aluminium imports (expected to take effect on March 23) have sparked concerns about a potential trade war with the EU and other world trading partners. In response to the announcement, nearly two weeks ago, Commission President Jean-Claude Juncker has unveiled a proposal to impose WTO compatible countermeasures against the US, totalling $3.5 billion in duties on US products (largely focusing on products which are produced in Trump’s stronghold states), including some agri-food products, such as orange juice and whiskey. Dairy products are not included on the list, however there are concerns about potential implications for soya imports and world prices.

By Alison Graham                                                                                                                                                

European Affairs Executive