O.W.N. asked Matthew Holmes, executive director of the Canada Organic Trade Association (COTA), and Markus Arbenz, executive director of IFOAM, about the impact of free trade agreements and how they compare with organic equivalency agreements.
What will free trade agreements offer or achieve that cannot be already gained through organic equivalency agreements?
Matthew Holmes: Organic Equivalency Agreements (OEAs) and Free Trade Agreements (FTAs) are two initiatives that achieve separate outcomes: FTAs involve macroeconomic issues and OEAs are more about technical issues. FTA’s typically relate to tariffs, quotas and border controls and other areas of trade – and organic producers have to meet some controls to FTA’s such as food safety. OEA’s allow for the specific technical requirements of each country’s system, as being equivalent and an exporter only has to take out one certification. A FTA can help an organic supplier and could open up an organic dairy producer for instance to get into another country. The organic status can still be equivalent, like a FTA at a technical level but not at trade access. FTAs allow companies to immediately enter a market without certain certificates or controls, etc, while an OEA won’t automatically open that market. However, the world is taking notice of organic equivalency agreements and that these quickly took care of technical issues and other bilateral and multilateral issues. FTAs are now looking to OEAs as we have contributed to relaxing some of these restrictive trade practices.
Markus Arbenz: In fact, most importantly for the organic industry are the Equivalence Agreements, which exist in the meantime between EU, USA, Canada and Switzerland (USA-Switzerland only through Canada or EU). Further free trade agreements can address custom duties or non-organic specific, non-tarifftrade barriers such as norms, food safety requirements or labeling issues. Main gains can be achieved if a government recognizes the approval processes for products of the other countries. That can save a lot of costs for the companies in the value chain.
And how will these FTA’s affect the organic sector?
Matthew Holmes: (Discussing organic dairy imports into Canada as an example) says Canada has really strict quotas on dairy product imports and it is almost impossible to sell fluid milk into the country even though it has an organic equivalency agreement with Europe; no one is selling milk into Canada. If Canada negotiated a free trade agreement with another country to allow dairy, imported organic milk would have to meet the organic standards of Canada. For example, a New Zealand (NZ) organic dairy co selling into Canada couldn’t get much market access.
But if a FTA was reached then any NZ organic milk could come in. But it would have to be certified to Canada’s organic standards or be part of an OEA – then the NZ company would only need their own NZ organic certification and this reduces the amount of bureaucratic measures and controls compared to an FTA. Some governments have restrictive tariffs in place to support agricultural sectors and FTAs often have restrictions on commodity exports.
Markus Arbenz: While of course the organic trade will also benefit from cost savings, there are also risks that economies of scale become even more price competitive versus small scale, local and seasonal production and trade. And the devil is in the detail, which in the case of US-EU FTA are totally unknown so far.
For example, European consumers fear that mandatory labeling of GM food, necessary in most European countries cannot be enforced on US products. On the other hand, the US does not accept so far organic livestock products for the production of which antibiotics were used. I am not sure if the present derogations could be kept in a FTA. It depends a lot if the negotiations will lead to the acceptance of achievement of the other parties or whether they want to liberalize production requirements, which may mean giving up on environmental and social standards.
What about the impact of the U.S. looking to have less restrictive EU policies for GMO foods exports under new trade negotiations?
Matthew Holmes: I was aware new EU and U.S. trade negotiations were reviewing Smart Stack GMO corn. However, I don’t believe it is a helpful solution to open up the market to more GMOs and an easing of GMO rules is an oversight.
Canada and the EU are also negotiating a new FTA. One condition is on the supply management of dairy products and there may be lobbying for less restrictive policies in the EU for GMOs and loosening of regulatory rules. Here, there could be consequences for the organic sector, which has always sourced ingredients globally and be open to trading globally and any agreement to allow more GMOs in the food supply channel will create problems for organics. Regarding timelines for the Canada-EU FTA, the negotiations have been underway for 18 months and the Canadian Prime Minister was due to visit Brussels recently, but there have been reported delays with this FTA.
Markus Arbenz: We don’t know the details yet, but as I mentioned, this point is one that the European opposition says it is very critical and that the FTA may only help the big players. The FTA discussion is not driven by the opportunities of people, but by the big companies, which want to economize costs and get market advantage due to their size and power.