Denmark could lose pork exports to EU under TTIP
NOAH Friends of the Earth Denmark researcher Nanna Clifforth argued to GlobalMeatNews that under a robust US-EU Transatlantic Trade & Investment Partnership (TTIP) agreement, the Danish pigmeat sector would have “no indication of being able to gain on the American market”.
The devil will however be in the detail, depending on which trade barriers are removed under the deal. If all tariff, non-tariff and quotas are removed, “the US Department of Agriculture (USDA) estimates US pork exports to the European Union will increase by US$1.2bn (£831m) or almost 2,000%,” Clifforth said, quoting USDA data.
The American federal department however has urged in a report that these figures need to be treated with caution because the EU is “very unlikely to remove all tariffs on pork imports”.
The EU is also likely to retain some health controls that will restrict US exports. The key non-tariff measure with respect to pork is ractopamine (an additive that promotes leanness) and the report said “it is extremely difficult to imagine the European Parliament and member states agreeing to ractopamine-treated imports”. It suggested “harmonisation agreements” on EU/US health controls, making it easier for US producers to develop alternatives to ractopamine that will enable them to sell pigmeat in the EU.
Heavy loss
Danish Agriculture and Food Council (Landbrug & Fødevarer) chief advisor and head of pig production Erik Kam agreed that the extent to which Denmark’s pork sector would be affected “will primarily depend on the sanitary and phytosanitary conditions set out in an eventual agreement”, in which ractopamine is a key issue.
Losing European export sales would be costly to Denmark's pork sector. In 2014, Denmark exported 1.36 million tonnes of pork worth DKK20.3bn (US$3bn) to the rest of the EU – its biggest export market. By comparison, Denmark’s pork exports to the US in 2014 were only 37,848 tonnes or DKK962m (US$144m) – the fifth biggest market for Danish pork.
The Danish pork sector is currently protected by import tariffs from American imports. “For half carcasses the tariff is €53.6 per 100kg and for deboned frozen products the rate is €86.9 per 100kg,” Kam said.
Moreover, the low cost of pork production in the US could be a threat. “In Denmark, the production cost is 14% bigger than in the US and 19% bigger than in Canada,” Clifforth said, adding: “The cost in Denmark is generally lower than in other EU countries except Spain.”
However, Kam added that “fluctuations in exchange rates can have a huge impact on these comparisons.” A difference in production cost of 10-15% in local currency can easily be levelled out if currency exchanges move, for example a stronger US dollar, making Danish exports more attractive. But in general lower energy costs, animal welfare requirements and labour costs make the US – even with the current exchange rate – more competitive, Kam said.
