Trade myths

David Henig, Director UK Trade Policy Project, ECIPE

Asking what we can and can’t do in terms of international food trade, when we need to be consistent with international rules and power politics, raises many questions. “It depends” is usually the answer, which is probably not what we want to hear. It is however often the most honest. As the UK starts our independent regulatory and trade policy journey we face a jumble of inconsistent rules at the World Trade Organisation (WTO) and elsewhere, opportunities for Free Trade Agreements with different countries, each with their own food trade priorities, and domestic interests, diverging strongly.

There is no definitive path for the UK in terms of food trade, animal welfare, or a US trade deal. There are however some facts for us to consider, which may clear up some of the myths. These will be illustrated in this article by considering various food products.

To start with, let’s consider a food that apparently disgusts the UK more than almost any other: the whole chicken in a can. It appears every so often on social media to illustrate the perils of a UK-US trade deal. Not currently on sale in the UK and judging by taste reports from the US that’s no great loss. But finding a product disgusting is no basis for banning it.

On the other hand, we want to export chicken. Perhaps our finest chicken tikka masala to India, the alleged country of its origin. It would be fair to say that many Indians would find this product baffling if not outright disgusting. But there might just be a demand for English-Indian food in India.

This is all supported by WTO rules, in particular that there should not be arbitrary bans on products because we don’t like the look of them, or because they come from the US and today we don’t trust the US. After all, we need to export, and we really don’t want anyone banning our products because they once had a bad experience with English beer.

Fact One: We cannot just ban imports from other countries for no good reason. Nor would we want to do so. This does of course constrain our regulatory sovereignty, as we shall discuss further below.

There are however some circumstances where WTO rules permit a ban, such as if the food poses a health risk. For example, in 1996 the exports of UK beef were stopped by the EU because of evidence of illness caused by eating cows infected with BSE. That ban has long been lifted, but the process of verifying UK beef to be safe in different countries continues, including the US.

It isn’t just human health that can prohibit products or mean they need to go through extra verification. The United States won a case through the WTO dispute process that allowed them to stop the importation of shrimp caught in a way that endangered sea turtles. In 2014 the EU banned the import of Alphonso mangoes and other Indian produce for a year over fears they contained fruit flies that could damage EU crops.

Fact Two: There are clear reasons for which food imports can be banned under WTO rules, and countries can create their own processes for assessing safety. But some of these, as suggested above, have required members raising disputes to clarify them.

If international trade rules were entirely clear on food, it would not be possible for some items to be banned in one country and not another on safety grounds. It would not therefore be possible for beef treated with growth hormones to be acceptable in the United States but banned in the EU since 1989. Or for haggis to be banned in the United States since 1971, but still be safe to eat in the EU.

WTO rules state that “Measures to ensure food safety and to protect the health of animals and plants should be based as far as possible on the analysis and assessment of objective and accurate scientific data.” The US believes the EU’s ban on hormone treated beef breaks this WTO rule and has disputed the EU ban at the WTO. They largely won, though with some caveats, but this still has not changed the EU approach. Instead the EU set up a new quota for the import of what is called ‘high-quality’ beef. However, in the case of haggis there seems to be little scientific evidence for the US ban.

Fact Three: Neither the US nor the EU fully follow WTO rules on food but expect others to do so. Both recognise that food can be a sensitive issue for their own citizens, but not for others. It turns out that food rules are not so clear after all.

For example, on the much-publicised issue of chlorinated chicken, although the US has raised a dispute about the EU’s ban on chicken treated with chlorine, this has never progressed. The European Food Safety Authority has suggested it to be safe, but other studies have been less conclusive. It isn’t just about safety though, but also animal welfare and the environment among others. Here, the rules lose further clarity, but this also opens opportunities for the UK.

In 2010 the EU banned the import of seal products on grounds of animal welfare. Challenged at the WTO, a dispute panel found this ban to be in line with rules. There is an exception for bans relating to public morals, and the EU could demonstrate consistent concern on the issue. On this basis, the UK could adopt rules relating to the way animals are treated covering both domestic production and import requirements, perhaps drawing on the clear support shown for the proposed Animal Welfare (Sentencing) Bill.

The UK would not be alone in adopting trade rules that considered animal welfare. In 2018 California voted for Proposition 12, also known as the Prevention of Cruelty to Farm Animals Act, which would ban the sale of products that fail to meet minimum standards, whether coming from California and elsewhere. There continue to be legal challenges to this measure within the US, to be quite possibly followed by challenges at the WTO, but it demonstrates a possible approach.

Fact Four: There are other possible grounds for import bans beyond harming human health, including consideration of public morals, animal health, and the environment.

To achieve agriculture policy goals, another option is to incentivise trade in higher quality products. Introducing different tariffs for chicken produced in different ways may run into difficulty with WTO rules. Doing something in a bilateral agreement with another country might be much easier. There appears to be no legal reason against eliminating tariffs for chickens raised in better conditions as part of a Free Trade Agreement, as long as you can find the partner to do this with, which probably isn’t the United States.

Similarly, we can agree to recognise each other’s higher welfare schemes, or indeed food produced according to specific conditions. There is a US-EU agreement to recognise each other’s organic food, which means food labelled as organic in the US can be sold in the EU as organic, and vice versa. Food labelling though remains a controversial topic in world trade, given the need to balance non-discrimination with consumer information, and one which requires careful handling.

Whether bilateral agreements could meet wider policy objectives in terms of food remains to be seen. Mainly because we don’t know what UK policy objectives in this area are likely to be. But it is certainly worth considering.

Fact 5: Bilateral agreements, whether Free Trade Agreements or Mutual Recognition Agreements, can be used flexibly to support policy objectives if we can find willing partners.

It is fair to say that international agreements constrain the UK on food trade, but limitations can be overcome if we have clear policy goals in mind. If the aim is simply to discriminate against food from the US or EU, then these countries will object, and likely win if there is a functioning WTO dispute system to which we are a party (this is not currently the case due to issues with the WTO). If on the other hand the aim is to develop a UK approach to food and trade which aims to raise standards in areas like animal welfare, then this can happen, if implemented fairly, though it may be challenged.

Perhaps the most important thing is the US or EU trade deal and going along with their approaches to food and trade. But we have options to find our own way, though there are also a lot of complexities to consider.