A week in Brussels, France, Latest news, Turkey & Med, United States

Week in Brussels: French presidency programme, Cross Channel food trade, Lithuania, Turkey

The trade policy world was comparatively quiet in Brussels as the Christmas break continued for many in the EU bubble in this first week of January 2022. More on what happened this week in EU trade by Rob Francis and Iana Dreyer below.

French presidency vows stronger US ties, including related to China, silent on FTAs

“The French presidency will contribute to strengthening relationships with the United States, namely in the context of the Trade and Technology Council, whilst respecting autonomous decision-making of the European Union,” states the official programme of the coming rotating presidency of the EU released in the early days of January.

“It will support deepening of the dialogue with the United States in foreign affairs matters, in particular China and the Indo-Pacific.”

In terms of trade policy, the programme says little that is new to regular readers of Borderlex: a focus on greening the EU’s trade policy, making progress on revising the General Scheme of Preferences, on the EU’s new ban of imports linked to deforestation, and on making progress on new defensive instruments, namely the International Procurement Instrument and the Anti-Coercion Instrument.

The programme is totally silent on the EU’s free trade agreements whose negotiations need finalising our agreed texts need ratifying with countries such as Chile, New Zealand, Australia and the Mercosur countries.

EU-UK agri-food trade dips

EU imports exports of agri-food products from the United Kingdom EU fell by 27% between January and September 2021 compared with the same period in 2020, whilst EU exports across the Channel and Irish Sea increased by 0.5%, according to European Commission figures published on Tuesday.

The former was described by the EU executive as the “most notable” decrease and equates to €2.9 billion in value. The US, Canada, New Zealand, and Moldova also saw sizeable reductions in their exports to the bloc.

Overall, UK exports of all goods to the EU fell by 14.5% in the first 10 months of 2021 as compared with the same period of 2020.

These figures reflect how the EU, unlike the UK, imposed full border procedures for British imports as soon as the country formally left the single market.

A spokesperson for the Brussels-based association FoodDrinkEurope described cross-channel trade as being “no longer frictionless”.

“Food and drink manufacturers on both sides of the channel now face new export / import requirements, certification, SPS checks and customs procedures. This has a considerable impact on the administrative workload of companies, costs, and is complicating the logistics of deeply integrated supply chains.”

“While this signals a smoother flow of EU exports to Great Britain, at least for the time being, one should keep in mind that EU operators themselves now have to deal with the phase-in of new UK import requirements and controls on EU goods,” said FoodDrinkEurope.

“This includes the requirement for pre-notification of agri-food imports, full customs controls & declarations for all goods (from 1 January 2022) & new requirements for Export Health Certificates (from 1 July 2022).”

Tuesday’s announcement also revealed that the total value of EU agri-food trade amounts to €239.5 billion, representing a 6.1% increase year-on-year.

The bloc also experienced a trade surplus of €51 billion, equating to an increase of 17% compared to the same period in 2020.

The biggest rise in terms of exports were those to the US, which saw a 15% increase, with South Korea and Switzerland also seeing strong growth.

USTR states support for Lithuania

The first official trade-related point of contact between USTR and the EU was a phone call between Katherine Tai and Lithuania’s Foreign Minister Gabrielius Landsbergis on Wednesday (5 January).

“Ambassador Tai emphasized the U.S. commitment to working with the European Union and its Member States to address coercive diplomatic and economic behavior,” says a readout.

The US has already offered trade support to Lithuania last December.

Watch that space as Valdis Dombrovskis has taken over part of the EU’s diplomacy dedicated to tackling the delicate Lithuania file and will be talking to Katherine Tai later today.

China is blocking exports from Lithuania and Chinese importers are reportedly asking other EU exporters not to include Lithuanian inputs in their products.

The approach taken by the EU so far is to handle this matter quietly via diplomatic outreach.

Turkey, EU bury hatchet over steel and pharma

While everyone was looking away Turkey and EU buried hatchets on steel and pharma WTO disputes. The panellists working on the cases were asked to suspend the proceedings.

The move almost coincided with an early announcement by the European Commission that it was planning to revise its steel import safeguard shortly before Christmas. Introduced in 2018 in the wake of the Trump administration’s introduction of tariffs on EU steel under its Section 232 legislation, the EU safeguard was extended for another three years in 2021 to the surprise of many.

Turkey filed a complaint against the measure at the WTO in the spring 2020 as the measure’s country specific quotas appear to have targeted Turkish exports quite specifically.

The EU for its part had taken Turkey that same spring to the WTO’s dispute settlement mechanism regarding local content requirements in the pharmaceutical sector.

It appears the two sides want to settle these matters amicably and not lose face over a potentially negative outcome in their respective cases and/or not have to face the tough question of whether to appeal their cases ‘into the void’ as the WTO’s Appellate Body continues not to function and Turkey did not sign up to the alternative appeals mechanism also known as MPIA.

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