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Expanding trade and increasing awareness benefits EU agri-food sector

The EU is the single largest exporter of agri-food products with exports reaching roughly € 129 billion in 2015. At the same time, the European market is relatively saturated. The European Commission has concluded that over the next 10 to 15 years, roughly 90 percent of the additional world demand for agri-food products will be generated on markets outside of the EU. At the same time, the Russian trade embargo have had a large negative impact on EU exports. In turn, EU exporters are looking for new market opportunities.

In a report from Copenhagen Economics, researchers have looked at the effects trade has on the European agricultural sector. The study has been conducted on three types of trade agreements. The trade agreement between the EU and Mexico is a “first generation” trade agreement, while South Korea and the EU have agreed on a new generation Deep and Comprehensive Trade Agreement, DCFTA. The EU and Switzerland have sector-specific agreements. These three types agreements have different  characteristics and the purpose of the study has been to assess the economical, social and environmental impacts these different types of agreements create.

The report shows large positive effects for EU agri-food producers, but also positive second hand effects on related sectors in the European economy. Overall, the trade agreements with Mexico, South Korea and Switzerland have increased EU agri-food exports by more than € 1 billion and raised value added in the agri-food sector by € 600 million. Exports to have supported almost 20,000 jobs in the agri-food sector, out of which 13,700 jobs are in primary agriculture. Agri-food exports also create opportunities in other parts of the economy. Value added in other sectors has increased by more than €  400 million and an additional 7,700 European jobs have been supported by these trade agreements. The agreements have also increased EU imports and, conversely,  given EU consumers access to foreign agri-food products at lower prices.

A general finding is that there is a potential for increasing EU trade even within the existing trade partnerships. On the other hand, entering new markets are coupled with high fixed initial costs which in turn warrant a targeted export strategy and call for partnerships between exporting companies and broader EU promotion campaigns to make market access easier.

Cooperation to gain footholds in new markets, and increasing trade on existing ones, will especially benefit exporting SMEs. One area where significant benefits could be made are exports to the Asian export markets, where demand for agri-food products of high quality while domestic production capacity is limited.

Trade agreements create opportunities for EU producers on global markets and benefit the EU economy and consumers in general. In the EU agri-food sector, the report shows that  income and employment is very dependent on access to export markets for stability and growth. EU exporters who, in large part, are SMEs are however not always fully aware of the trade potentials in new EU trade agreements or the increase in foreign competition when trade agreements are entered in with third countries. Companies and organizations thus need to be better informed about new trade agreements, the report concludes.

 

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