Brussels, 03/07/2013 (Agence Europe) - With the round of negotiations on a free-trade agreement between the United States and the European Union due to open on 8 July against a backdrop troubled by the spying furore, Momagri revealed on Thursday 4 July that the European Commission is working on the basis of a study by the CEPR (Centre for Economic Policy Research) which does not allow for the opportunities for and risks to agriculture to be assessed.
Momagri, a think-tank specialising in agricultural policy, hopes to alert the European political decision-makers to the inadequacy of this CEPR study and of the negotiation tools generally used to assess the impact of policies of agricultural trade liberalisation. However, José Manuel Barroso, President of the European Commission, is using the CEPR study to sell an agreement of this kind to the Europeans. Even worse, agriculture is played down (its specific characteristics, such as price volatility, are not taken into account), or even neglected in the study, despite the fact that it is one of the hyper-strategic sectors of this century.
This study is peppered with inadequacies which must be flagged up as a matter of urgency, argues Momagri. The organisation explains that the model used assumes that producers know in advance the quantities they produce and the prices at which they will be able to sell. All production factors are able to circulate freely, whether capital or workers. Agricultural markets are the subject of no financial speculation. Intellectual property rights, which play a decisive role in the agricultural competitiveness of the region, are not taken into account. Lastly, and consequently, agricultural prices are not volatile.
And with such favourable hypotheses, according to the CEPR, a transatlantic agreement would bring additional growth of €68 to €119 billion a year in the EU and between €50 and €95 billion for the United States.
But presented differently, these figures are far less convincing: the growth of GDP would be just 0.3% to 0.5% for Europe and between 0.2% and 0.4% for the United States. These poor results are considerably below the model's margin of error and are insignificant. From “win win”, this agreement could turn into a “lose lose” scenario and lead to a misled market, Momagri's experts argue.
Economists such as the Nobel prizewinner Joseph Stiglitz have criticised the shortcomings of the models used ever since the financial crisis of 2008, which these models were incapable of predicting.
More seriously, the agricultural sector is dealt with as a traditional industrial sector, masking the specific functioning of the agricultural markets and the resulting price volatility. “This means that, as things stand, the political decision-makers are not aware of the impact of a decision of this kind on agriculture”, Momagri laments.
The think tank has used its economic model to assess the consequences of a similar agreement for European agriculture and will publish the results after the summer.
Another issue raised is the urgent need to assess the compatibility of the CAP (common agriculture policy) with the Farm Bill, or to add to the current reform of the CAP in order to balance policies on either side of the Atlantic. In conclusion, the politicians must demand that more relevant tools be used before committing to a project which could have disastrous consequences. At a time when the European authorities are raising questions about the espionage practices of the US, it is just as necessary to keep an eye open to the quality of the negotiating tools, Momagri concludes. (LC/transl.fl)