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What is happening to EU and US agricultural policies, and how are they impacting on Australia’s agricultural trade and investment?

Supported by the EU Centre for Global Affairs at the University of Adelaide, 2 of the world’s most prominent agricultural thought leaders addressed the Committee for Economic Development of Australia (CEDA) in Adelaide on 4 March 2016.

The speakers were Dr Tassos Haniotis, Director for Agriculture and Rural Development in the European Commission Directorate for Agriculture in Brussels, and Dr Joe Glauber, former Chief Economist, US Department of Agriculture and now with the International Food Policy Research Institute (IFPRI) in Washington DC.

Dr Haniotis summarised recent developments in the EU’s Common Agricultural Policy, stressing the decline in EU farmer supports that traditionally have been coupled to production and their replacement with de-coupled measures such as direct farm income supports and regional payments. He also stressed the EU’s commitment to open up to trade with more countries, and not only via the Trans-Atlantic Trade and Investment Partnership (TTIP) that is currently being negotiated with the US. The EU is exploring bilateral free-trade agreements with Australia, New Zealand and several Asian countries that would boost two-way trade and investment flows between Australia and the EU’s 28 member states.

Dr Tassos Haniotis presentation

Dr Tassos Haniotis presentation

Dr Haniotis drew attention to the fact that Agriculture is sometimes described as the 2% sector given its low GDP share and overall economic weight. The result is that policy is often driven on the defensive to justify spending. Agriculture could also, however, be seen as the 40% sector as the focus shifts from share of GDP to share of land use and the importance of addressing both environmental and climate challenges. This perspective brings wider growth and employment links to the forefront as the need to address the supply chain becomes relevant for land-use and food waste. Dr Haniotis suggested, moreover, that Agriculture could in fact be seen as the 100% sector given increasing consumer food demand-driven policy concerns.

Dr Glauber similarly gave a detailed account of what has been, and likely will be happening as the US implements its latest Farm Bill over the next 4 years. He noted the rapidly increasing involvement of emerging middle-income countries in global food and agricultural trade. That provided a backdrop to examine what is likely to happen if/when the 12 participating countries ratify over the next 2 years the recently negotiated Trans-Pacific Partnership (TPP) (which includes the US and Japan but not China). The TPP and the prospective TTIP are huge mega-regional arrangements that will generate winners, but also some losers among excluded countries. Dr Glauber drew attention in his interview with ABC, to the heated political climate in the US which is currently contributing to a rising tide of anti-trade sentiment, though he remains hopeful that will change once the elections are over. Dr Glauber concluded with questions to stimulate discussion, such as:

  • Do these mega-regionals create new standards for global trade negotiations?
  • Can TPP’s membership be broadened to include more Asian countries (e.g. China)?
  • Can the mega-regionals be multilateralised, e.g. via the WTO?
  • If not, what is left for the WTO apart from resolving trade disputes?
  • What next if the TPP is not ratified?
  • In particular, will that lead to increasing agricultural protectionism in middle-income Asian countries such as China and Indonesia, as was earlier seen in Japan and Korea?
  • What role for the Cairns Group of non-subsidising farm-exporting countries as it celebrates its 30th anniversary this year?

These questions generated a lively discussion that left participants with more to ponder which forthcoming EU Centre events will continue to explore.

For further information the presentations are available here:

Dr Tassos Haniotis “Global challenges, CAP prospects: an EU perspective”

Dr Joe Glauber “Whither Multilateralism?”

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