Transatlantic Trade Sensitivities Come to the Fore with Regulatory Divergence on Pesticides
More than a quarter of pesticides used by U.S. farmers are banned in the European Union. Atrazine which the U.S. Environmental Protection Agency estimates to be the most widely used herbicide in the U.S., for instance, was banned in the EU in 2003 due to concerns that it is a groundwater contaminant. In April 2018, based on potential health risks to bees, the three main neonicotinoid pesticides - clothianidin, imidacloprid and thiamethoxam - which are used to treat about 90 percent of the corn planted in the U.S. also were barred in the EU for all outdoor usage. The EU moreover is planning new bans on pesticides that hold authorizations in the U.S. based on potential harm to humans and bees: the insecticide chlorpyrifos may be banned in the EU as of February 2020 and a neonicotinoid insecticide known as thiacloprid as of May 2020. The EU default values of maximum allowed levels for pesticide residues in or on food and feed of plant and animal origin (0.01 mg/kg for pesticides not specifically mentioned) also are lower than those found in most countries, including the U.S., as well as the international CODEX guidelines.
The existing gulf between the U.S. and EU on pesticides regulation underscores a widely disparate policy approach. While the EU espouses the so-called precautionary principle for approving pesticides and setting maximum residue levels (MRLs) - thus taking protective action where scientific evidence is inconclusive but there is a presumption of risk to human or animal health or the environment -, science-based proof of harm has to be demonstrated for regulatory action to be taken in the U.S. Whereas the EU further maintains it is necessary to apply the precautionary principle to protect consumer health and the environment, it has been the object of strong pushback from the U.S., among other countries, for being trade inhibiting.
Accordingly, in a submission to the World Trade Organization (WTO) Council for Trade in Goods on 4 July 2019, the U.S. and 14 other countries (Brazil, Australia, Canada, Malaysia, Costa Rica, Peru, Colombia, Paraguay, Ecuador, Guatemala, Honduras, Dominican Republic, Nicaragua, Panama, and Uruguay) called on the EU to re-evaluate its approach to product approvals which “unnecessarily and inappropriately” restrict trade and to “use internationally accepted methods” of setting pesticide residue tolerances. The precautionary principle also recently has come under fire by Brazil within the context of the EU-Mercosur trade deal, with President of Brazil Jair Bolsonaro threatening to challenge EU at the WTO if the principle is used for “protectionist” purposes. Brazil is the world’s largest user of pesticides and Bolsonaro, within the first 100 days of becoming President, authorized the registration of 152 previously banned pesticides, many of which are banned in the EU. In the meantime, Brazil and the U.S. have strengthened trade ties, with a free trade agreement reportedly in the pipeline.
The executive arm of the EU currently is undertaking a fitness check of regulations relating to pesticides approval and maximum allowed levels for pesticide residues which could lead to new or updated legislation. It is expected that the fitness check will reaffirm the EU’s commitment to the precautionary principle, focusing efforts on how to improve implementation of the legislation and addressing any gaps and administrative burdens. The new EU Commissioners, i.e. heads of the EU’s executive arm, taking office before the end of the year also have suggested they will take measures to bolster health and environmental protection measures, including by stimulating the take-up of low-risk and non-chemical alternatives, in particular those of biological origin, and reducing bureaucracy for these to be brought to the market quicker. EU’s trade policy further will be focused on protecting the environment by spreading environmentally friendly goods and incentivizing trade partners to implement measures to protect the environment and combat climate change.
In light of these developments, the regulatory gap on pesticides is set to widen. As new measures on pesticides can have profound impacts on global agricultural production and trade in key products, companies will have their eyes peeled on the European and American policy spaces. Increased regulatory divergence on pesticides also likely will flare up existing transatlantic trade sensitivities, which have long been strained over dissimilar food standards, and could become a point of tension in any post-Brexit UK-U.S. trade talks.