Negotiations on a U.S.-EU Transatlantic Trade and Investment Partnership could begin by the end of June based on comments by White House Deputy National Security Adviser Michael Froman to an informal meeting of EU trade ministers last week.  The EU was the world’s largest importer of agricultural commodities and food in 2012 at $131 billion, up 145 percent since 2000.  U.S. agricultural exports to the EU of $10.1 billion in 2012 increased only 54 percent over that same time.

The U.S. share of the EU market in 2012 was 7 percent, half the share in 2000 according to a Foreign Agricultural Service report Agricultural Exports to the European Union: Opportunities and Challenges.  The EU was once the largest market for the U.S., but is now the fifth largest behind China, Canada, Mexico and Japan.  U.S. exports of $10.1 billion to the EU-27 countries in 2012 were less than the $13 billion of exports in 1980 to those 27 countries.  When adjusted for the price level change, exports in 1980 were $36 billion in 2012 dollars.

Brazil has taken over as the top supplier to the EU with a market share estimated to be almost double the U.S. share.  Soybean and soybean meal shipments are a major factor in that shift.  China and Chile have also increased market share in the EU, with fruit and vegetable exports as prominent products.  Ukraine has grown to be a $5 billion supplier in 2012 of grain, rapeseed, and sunflower oil.

In 1980, corn and soybeans together accounted for 48 percent of U.S. exports to the EU; in 2012 they were 15 percent.  Biotechnology has become the biggest barrier to trade.  Ukraine is the largest supplier of corn and Brazil for soybeans.  Some high-value, consumer-oriented products have gained in value.  Exports of tree nuts have increased from $381 million in 1980 to more than $1.7 billion in 2012.  Consumer-oriented products like beef and poultry continue to face significant sanitary and phyto-sanitary (SPS) issues and technical barriers to trade (TBT).

 

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Bioenergy has been a bright spot over the last five years.  Ethanol exports to the EU were $450 million in 2012, 37 percent of EU ethanol imports, and wood pellets and wood chips were valued at $250 million.  Biodiesel exports were down because of EU antidumping and countervailing duties imposed in 2009.  A 9.6 percent anti-dumping duty has been placed on U.S. ethanol imports.  The EU Renewable Energy Directive requires biofuels to meet certain sustainability criteria to qualify for tax incentives and count toward use mandates and will likely affect imports of energy feed stocks and renewable fuels from the U.S.

In contrast to the decline in U.S. exports to the EU, U.S. agricultural imports from the EU reached a record $16.7 billion in 2012, up 4 percent from 2011. Top products included wine and beer, essential oils, and snack foods.  The U.S. agricultural trade deficit of $6.7 billion in 2012 for the EU was the largest of any U.S. trading partner and contrasts sharply with that of other countries.