A Global Trade Game Changer? Opportunities and Challenges of a US and EU Transatlantic Trade and Investment Partnership Agreement (TTIP)

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1 A Global Trade Game Changer? Opportunities and Challenges of a US and EU Transatlantic Trade and Investment Partnership Agreement (TTIP) A Special Multi-Client Study With Implications for the Global Agriculture and Food Sectors March 2014 Informa Economics, Inc. is pleased to announce the launch of an important new multiclient study on the potential gains for the US from a TTIP Agreement. The study will draw on our US and EU team of trade and commodity experts to examine the trade opportunities and challenges that would occur for the major agricultural and food sectors from tariffs being reduced to zero and sanitary/phytosanitary and other non-tariff barriers being either reduced or eliminated. Introduction The US and the EU account for nearly half of world GDP and 30 percent of world trade. Goods and services worth $2.7 billion/ 2.0 billion are traded daily between the two countries, promoting economic growth and supporting millions of jobs in both economies. In addition, the US and the EU have directly invested more than $3.7 trillion/ 2.8 trillion on both sides of the Atlantic. Over the last twenty years, EU exports to the US have registered larger gains than US exports to the EU. o US agricultural product exports (including fish and forest products) to the EU increased from $9.7 billion in 1992 to $12.1 billion in 2012 while EU exports to the US expanded from $5.7 billion in 1992 to $17.8 billion in Top US exports to the EU in 2012 included soybeans, almonds and wine. EU exports to the US are mostly consumer oriented products with beverages and snacks accounting for about two-thirds of all exports. While the US and EU are major agricultural trade partners, there is ample opportunity for both to increase their respective share of trade as illustrated below.

2 US and EU Transatlantic Trade Multi-Client Study 2 The potential has not been realized in great part because trade has been significantly limited by tariffs and non-tariff barriers. Thus, this free trade agreement can be a game changer for global trade! Furthermore, the current slow economic growth in both the US and EU could be the driver for compromise. Some Facts Outlining the Opportunities and Challenges Using WTO tariff profiles, the average final destination duty for agricultural products entering the US is 4.9 percent ad valorem and the EU average is 13.8 percent. The US and EU each have relatively high tariffs for dairy products, sugars and confectionery, and beverages and tobacco. The EU also has relatively high applied tariffs for meat products and cereals. Tariff rate quotas affect 4.5 percent of the US agricultural tariff lines and 2.9 percent have special safeguard measures in effect. In comparison, tariff rate quotas affect 11.3 percent of EU agricultural tariff lines and 23.9 percent have special safeguard measures in effect. The EU imports $16.7 billion in grains and oilseeds, of which only 14.5 percent is from the US ($2.4 billion). Sanitary and phytosanitary (SPS) standards and non-tariff barriers are major concerns for trade and will be central to the negotiations, especially for the US Some of these include: EU has a trade restriction that prohibits the import of beef produced using hormone implants US restricts beef imports from the EU due to BSE concerns The EU biotech approval process is sluggish, in comparison to the US, which slows imports from the US EU restricts imports of US poultry processed with certain pathogen treatments or pork that is not ractopamine free The Renewable Energy Directive allows the EU s sustainability objectives to serve as de facto trade barriers against US biofuels producers Difficulties created for EU cheese exports to the US (caused by the US Dairy Import Assessment and by the Grade A Pasteurized Milk Ordinance) limits trade

3 US and EU Transatlantic Trade Multi-Client Study 3 The TTIP can have a tremendous impact across many sectors of the agriculture-food supply chain and will create winners and losers on both sides of the Atlantic. A critical success factor to become a winner is to plan ahead and have the critical facts ready ahead of trade negotiations. Planning along with fact-based analytics allows industry groups/companies and other stakeholders to: (a) understand the specific issues; (b) quantify the relative impacts; (c) develop industry/company positions and action plans; (d) influence the outcome of negotiations; and (e) develop a plan for future opportunities or threats. Approach and Scope of Work The objective of this study is to assess the opportunities and threats for US agriculture and food trade. The study will focus on evaluating two broad alternatives, including: Reducing import tariffs to zero; and Includes establishing or increasing import quotas with zero tariffs Easing or eliminating sanitary and phytosanitary and other non-tariff barriers. Input will be derived from Informa s understanding of the agricultural and food sectors of both economies as well as from targeted industry interviews. Informa will use an analytical framework that includes delving deeply into specific sectors of interest and then applying quantitative analyses, market and business logic and industry insights to quantify impacts in each major sector and provide a realistic picture of future opportunities and threats. This process is described below: Establish baseline trade pattern forecasts based on 2012 actual supply, domestic use and trade for the targeted agricultural sectors; and Examine the US and EU trade matrixes for the targeted sectors to: (1) evaluate whether US exports will become more competitive relative to other exporters and (2) estimate the incremental share (if any) the US can gain through TTIP and the target sectors. These estimates will be based on: Analyses of how EU import tariffs will change relative to other trade competitors Reviews of existing non-tariff barriers that limit US trade Analyses of US and EU baseline supply, demand and trade to 2012 and outlook for 2020 Quantitative and qualitative analysis of the market dynamics of each targeted sector. Trade between countries is a function of factors including relative competitiveness, tariffs, logistics and other factors; these will be examined to estimate potential trade changes. The study will target the following agricultural sectors: Feed Grains (corn, corn co-products and Rice grain sorghum) Biofuels Additional sectors will be added depending on the interests of the subscribers.

4 US and EU Transatlantic Trade Multi-Client Study 4 I. Background Study Outline Describe the historical trade patterns between the United States and the European Union in terms of exports and imports Identify the overall approach and top priorities of the US and EU in the negotiations and the challenges that will be faced in completing an agreement Explain the importance of the non-agricultural EU contingencies on issues such as biotechnology II. EU and US Agricultural Product Supply/Demand Baselines, Historical and Forecast to 2020 This section will develop baseline supply/demand balances and projections through 2020 for the targeted sectors and commodities. The project team will leverage its ongoing supply/demand forecasting work to develop these baselines. Develop EU and US baseline balance tables and trade matrices for the target sector/commodities When needed, export value (i.e., instead of volume) will be developed and will be forecast for sectors/commodities where volume is not a good indicator Examine critical developments that will occur through 2020 and their implications for the baselines; this would include: EU CAP Reform EU Biofuel Mandates US Farm Bill and Biofuel Policies Population and Income Growth The above baselines will be used in Chapters III and IV to compare potential gains in exports to 2020 by removing tariffs and eliminating non-tariff barriers to determine if these gains are realistic or restructuring of production may be needed to take advantage of increased market access. III. Impact of Zero Tariffs and Duty Free Quotas with Sizable Quantities The objective of Section III is to assess the impacts of market liberalization in terms of tariffs under TTIP on US and EU agricultural product exports indicating potential market opportunities and threats. Describe current tariff/quote trade structure for the targeted sectors Identify gains in relative export competitiveness if tariffs are reduced to zero. Current EU tariffs and import quotas for the targeted sectors will be identified, reviewed and compared to those of major export competitors

5 US and EU Transatlantic Trade Multi-Client Study 5 Overall export gains will be analyzed on the assumption that EU tariffs are reduced to zero and import quotas are duty free and set at levels resulting in meaningful gains in exports The potential export gains forecast to 2020 from zero tariffs will then be compared to the baseline analyses in Part II to determine if these gains are viable Provide comments/insights as to how tariffs may be reduced; that is, for certain commodities there may a structure to phased out tariffs over an extended period or a specific quota system for the US IV. Impact of Relaxing or Eliminating Non-Tariff Barriers The objective is to evaluate and measure US potential trade changes that result from changes to sanitary and phytosanitary and other non-tariff barriers which are particularly critical for food trade. Non-tariff barriers within food and agriculture are expected to be a very contentious part of the negotiation period and it is challenging to predict the ultimate outcome as non-economic factors including domestic farm politics or consumer perceptions will play a major role as, for example, these factors did during the NAFTA negotiations. Thus, the analytical framework will involve two approaches including a scenario/sensitivity analysis. First: Non-Tariff Barriers are Eliminated or Phased Out Although it is very unlikely that this would happen for all targeted sectors, the results will give a perspective on how important these non-tariff barriers are in terms of the impact to US trade In some instances the impacts of eliminating these barriers can be derived by analyst judgments looking at historical trends and how these trends may have changed when the nontariff barriers were instituted Second: Alternative Scenarios to Reflect Potential Outcomes for Each Sector/Commodity For each relevant target sector or commodity, the project will develop a set of likely or realistic views regarding non-tariff barriers. The view will be derived from conversations with industry and/or those involved in trade negotiations and from Informa on-going analysis and knowledge about trade policies, a sector s influence on domestic farm, approaches used by the EU and US in past trade negotiations, consumer perceptions and other factors that can shape the final outcome. When relevant, the influence of non-agricultural interest groups promoting non-tariff barriers and potentially having a place to influence trade policy will be examined. This two-step approach would provide a fuller picture and help reflect and isolate the different dynamics that non-tariff barriers have on each individual sector or commodity.

6 US and EU Transatlantic Trade Multi-Client Study 6 V. Key Findings and Strategic Considerations for Targeted Sectors/Commodities This section combines the results and findings from the tariffs and non-tariff barriers analyses (Parts III and IV) and develops a combined trade impact summary for each targeted sector/commodity that outlines issues including: Potential trade volume/value changes; baseline estimate and alternative scenarios Key issues that will influence trade negotiations Major constraints that may limit elimination of tariffs and non-tariff barriers Identification of opportunities and threats; including potential structural changes to take advantage of new relative competitive position. Study Deliverables Comprehensive Study Report and Presentation Materials All participating clients will receive A Global Trade Game Changer? Opportunities and Challenges of a US and EU Transatlantic Trade and Investment Partnership Agreement study report and presentations materials used. All materials will be available electronically. Post-Study Web-Based Seminar A concluding group seminar will be held for all clients to participate with study staff and consultants to review the findings and implications. Final Report Presentation at Clients' Offices - Optional Informa staff is also available to present the final report and conduct in-house seminars to a client upon request. Presentations will be made with the client paying related travel expenses. March/April 2014 June 2014 June/July 2014 Project Schedule Study begins Study completed final report sent to clients Client seminar to review report and Individual presentations at client offices Study Fees The fees for the study are $14,500 for Informa Economics clients and $16,500 for non-clients. The above fees include client group review seminar. Presentations at client's offices by Informa staff are optional with a separate fee as noted above. Informa will bill half of the study fee at sign-up and half at project conclusion. Who Should Subscribe to This Study? The issues covered in this study apply to a wide range of agriculture, food, and biofuel industries, including: Agricultural Commodity/Livestock Groups Agricultural Trade Associations Biofuel Producers/Exporters Input Suppliers Financial Institutions

7 US and EU Transatlantic Trade Multi-Client Study 7 Agricultural and Food Companies US and EU Government Agencies State and Local Governments Lobby Groups Transportation and Logistics and many more Study Staff and Review Team Informa Economics is headquartered in Memphis, TN with offices in Washington, D.C. and Agra CEAS ( Informa ) with offices in London and Brussels, will work on this study. Both are sister companies under the Informa plc and Informa Economics Group umbrella. Informa is a world leader in broad-based agribusiness, energy and transportation consulting and commodity market analysis. Both firms are extensively qualified to conduct the market evaluation as they bring extensive experience working with agribusiness, trade associations and governments around the globe along the agriculture, food, energy, and transportation value chains. Informa has assembled a special team of highly qualified individuals to conduct this evaluation. The project leader is Mr. Joe Somers, Vice President. He will be supported by a uniquely wellqualified team of experts including Juan Sacoto, Senior Vice President and Head of Informa s Consulting practice; Dr. Maria Christodoulou, Director of Agra CEAS Brussels office; Michael McConnell, Senior Consultant, Riley Higby, Consultant, and Callie McAdams, Senior Consultant. Dr. Bruce A. Scherr, Chairman of the Board and Chief Executive Officer and Tom Scott, President and Chief Operating Officer will serve as overall project reviewers. Informa will draw on its full team of professionals as required to accomplish this project. Individual biographies for each team member are included after the enrolment form.

8 US and EU Transatlantic Trade Multi-Client Study 8 ENROLLMENT FORM Yes, I want to receive the special multi-client study, entitled A Global Trade Game Changer? Opportunities and Challenges of a US and EU Transatlantic Trade and Investment Partnership Agreement (TTIP) The cost of the study: For clients $14,500 For non-clients $16,500 Return Form to Informa Economics via fax to (703) or (901) or scan and Please have someone contact me to provide further information. Name: Signature: Title: Company: Street Address: City, State, ZIP: Telephone: Fax: Address: Please note this is a multi-client study and is intended only for internal use of client subscribers and not for public distribution. Please feel free to contact us with questions: Bruce Scherr Chairman of Board and CEO Informa Economics, Inc. 775 Ridge Lake Blvd., #400 Memphis, TN Phone: Fax: bruce.scherr@informaecon.com Joseph F. Somers Vice President Informa Economics, Inc Elm Street, Suite 210 McLean, VA Phone: Fax: joe.somers@informaecon.com

9 US and EU Transatlantic Trade Multi-Client Study 9 Project Team Biographies Bruce A. Scherr, Chairman of the Board and Chief Executive Officer. Dr. Scherr has been with Informa Economics, Inc. (formerly Sparks Companies, Inc.) since 1987 in several executive capacities including President and CEO. In addition, he was an Advisor for Metalmark Capital LLC, a private equity fund. Formerly he was president of Sparks, Jacobs, Scherr, Inc. (SJS), a sister company to Sparks, and president of Agri-Commodities, Inc., an agriculture consulting firm based in Andover, Massachusetts, which was acquired by SJS. Prior to forming Agri-Commodities, Dr. Scherr was a divisional vice president at Data Resources, Inc., where he developed and utilized for the public and private sectors the first commercially available econometric model for US agriculture. Dr. Scherr received his bachelor's degree from Rutgers University and his master s degree and doctorate from Purdue University, all in agricultural economics. Currently, he is a member of the Board of Trustees of the North American Electric Reliability Corporation; E. Ritter & Company; Santa Energy Company; and Chairman of the Board of Legumex Walker, Inc. In addition, he served as a member of the Global Strategy Institute Advisory Council of the Center for Strategic and International Studies; as a member of the Board of Directors for Desert STAR Inc., an electrical transmission Independent System Operator for the Desert Southwest from January 2000 through February 2002; and as a member of The University of Tennessee s (UT) Institute of Agriculture Agricultural Development Board and UT s Committee for the Future. He was named a 2007 Distinguished Agriculture Alumni from Purdue University and he is a member of several honorary research and agricultural societies, a member of the National FFA Foundation Sponsors Board 2000 through 2001 and a former advisor to the President's Council of Economic Advisers and National Aeronautics and Space Administration. Thomas P. Scott, President and Chief Operating Officer. Mr. Scott has been with Informa since Mr. Scott's specialized work has included business strategy, agribusiness economic development, feasibility and site selection work, as well as various market analyses. In addition to his work in North America, Mr. Scott has extensive experience in the agribusiness sectors of Central Europe, Southeast Asia and South America. He has been involved in many training programs developed and delivered by Informa Economics. Prior to joining the company, he had various assignments in management, trading, logistics and merchandising with Continental Grain Company. He received his bachelor's degree in agricultural economics and business from Cornell University and a master's degree in business administration from the Amos Tuck School of Business Administration at Dartmouth College where he was an Amos Tuck Scholar. Juan E. Sacoto, Senior Vice President. With Informa Economics since 1997, Mr. Sacoto is the Leader of Informa s Project Consulting Group. Mr. Sacoto has extensive experience in a wide range of management consulting services across most segments of the global agricultural and food supply chain and related supply chains such as renewable fuels and logistics, among others. Mr. Sacoto s experience and on-work often involves business strategy, risk management, market research, feasibility evaluation, financial and competitive analyses, economic modeling and forecasting, economic development, economic impact, merger and acquisition (M&A) duediligence work, and related management consulting work. Mr. Sacoto has knowledge and experience analyzing many segments of the agriculture and food supply chain including: fertilizer

10 US and EU Transatlantic Trade Multi-Client Study 10 production, seed, farm equipment manufacturing, crop and livestock production economics, sugar refining, grain storage and merchandising, grain and oilseed processing, sugar manufacturing, meat processing, vegetable oils, aquaculture, farmland economics, animal rendering, ethanol and biodiesel, pet food manufacturing, transportation infrastructure, and food consumption, among others. He also has extensive practical experience evaluating agribusinesses across several regions, including the US, Canada, Mexico, Brazil, Argentina, the EU, Mexico, China, Japan, Korea, Ukraine, Russia, and Southeast Africa. He is fluent in Spanish and has broad cross-cultural training. Prior to joining the company, he worked as a financial and equity analyst. He received his bachelor's degree in finance from Jacksonville State University and his master's in international business administration from The University of Memphis. Joe F. Somers, Vice President. Mr. Somers is part of Informa's Project Consulting Group and is responsible for economic analyses and agricultural policy consultancy work in Informa's Washington, D.C., office. He brought to Informa more than 26 years' experience with USDA's Foreign Agricultural Service (FAS) as a Foreign Service officer and has been a member of Informa's staff since While at FAS, he served in Brazil and Argentina and traveled on official USDA factfinding trips. In Washington, D.C., he supervised and conducted world supply/demand and trade policy analyses for a wide range of commodities and managed publication of several analytic circulars. He also was director of research and marketing for the GIC Group, Alexandria, Virginia, where he was responsible for business development and economic and market analyses. He received his bachelor's degree in political science from Northeastern University, Boston, and master's in agricultural economics from the University of Massachusetts, Amherst. Dr. Maria Christodoulou, Director of Agra CEAS, Brussels. After graduating in Economics from the University of Athens, Greece, Maria completed a Masters and a Doctorate in Agricultural Economics at the University of Reading, UK, and a training period within the European Commission's DG Agriculture. Since joining Agra CEAS Brussels in 1992, Maria has worked on an extensive range of economic, policy, and business impact studies in the agricultural and food sectors and has, over the years, gained specific expertise in the European agri-food marketing chain, food safety, animal health and welfare, and international trade issues. Maria has extensive experience managing studies and projects for EU institutions and international bodies (European Commission, European Parliament, WTO, OIE). This has included many significant evaluations and impact assessments in trade related policy fields for the European Commission, which were led by Agra CEAS, for example, the evaluation of the Community Animal Health Policy (CAHP) and options for the future which has led to the current EU Strategy on Animal Health, the evaluation of the Community plant health regime and supplementary study in support of the impact assessment for the forthcoming EU Plant Health Strategy, and the impact assessment of forthcoming EU legislation on Country-of-Origin labelling for the whole range of agricultural and food products. Other work conducted over the last decade has included trade related projects for exporters to the EU of US timber, fruit juices, and meat. She has also undertaken work on wine exports from the EU. Maria is fluent in English, French and Greek.

11 US and EU Transatlantic Trade Multi-Client Study 11 Anne Maréchal, Consultant at Agra CEAS Consulting, Brussels. Anne holds an MSc in Agriculture, Food Industry and Environment from Group ESA Angers, France and a MBM in European Business from ESCP Europe Business School in Turin, Italy and London, UK. Anne joined Agra CEAS following the completion of a bluebook traineeship in DG Agriculture and Rural Development of the European Commission. Anne has contributed to a number of studies notably on trade and traderelated issues, including a study on the Comprehensive Economic and Trade Agreement between Canada and the EU. Over the years, Anne has developed extensive knowledge on agricultural policy, markets and trade. Anne has had prior consultancy experience through various academic projects for public and private organisations, in South Africa, Italy and the United Kingdom. Before joining Agra CEAS, Anne worked in the Netherlands in trading of agricultural products to EU retail chains. Anne is fluent in French, English and Italian. Michael McConnell, Senior Consultant. Mr. McConnell is a senior consultant within Informa s Project Consulting Group, based out of Informa s Washington, D.C., office, where he works with numerous clients, focusing on the economic effects of trade and agricultural policies on US agriculture and its stakeholders. McConnell also performs market research and analysis on a wide range of markets and commodities. Prior to joining Informa, McConnell worked at the US International Trade Commission (USITC) where he was the agency s grain analyst. Before his work at USITC, McConnell was an agricultural economist at USDA s Economic Research Service where he was an analyst for a number of commodities in the market outlook program, including livestock (specifically beef) and sugar. McConnell received his master s and bachelor s degrees in economics from Lehigh University in Bethlehem, Penn. Callie P. McAdams, Senior Consultant: Ms. McAdams is a consultant within Informa Economics Project Consulting Group. She works at the company s Washington, D.C., office. Her responsibilities include assessing agricultural policy as it relates to US producers, consumers, policymakers, and the food industry. She also performs research and analysis of diverse domestic and international agricultural matters. She has a background in a wide range of agricultural areas, including livestock, crops, and diversified agricultural production. Prior to joining Informa, she worked as a research assistant at Texas A&M University where she modeled the influence of health information on consumers willingness to pay for horticultural products. She also interned with the North Carolina Agricultural Extension Service, doing work on marketing and crop production. She received her bachelor s degree in agricultural business management and animal science from North Carolina State University and her master s degree from Texas A&M University in agricultural economics. Riley Higby, Consultant. Mr. Higby is a member of Informa Economics' Project Consulting Group, with responsibilities for financial analysis and market research. Prior to joining Informa Economics, Mr. Higby was a management consultant with Lookout Ridge Consulting, formerly Salisbury Management Services, in its Pacific Northwest office. At Lookout Ridge Consulting, he specialized in consulting roles that included financial analysis, succession planning, and management consulting for agri-business and production agricultural operations. Mr. Higby grew up on a commercial cattle operation in western Idaho. He earned his bachelor's and master's degrees in agricultural economics with a minor in accounting at the University of Idaho. While at the

12 US and EU Transatlantic Trade Multi-Client Study 12 University of Idaho, Mr. Higby was an intern with the Livestock Marketing Information Center, studying cow-calf economics and management information systems. Mr. Higby's graduate level thesis focused on an economic analysis of Pacific Northwest apple production as well as the impact of specific management practices. About Informa Economics Informa Economics, Inc. (Informa) is the world leader in broad-based domestic and international agricultural and commodity/product market research, analysis, evaluation and consulting. Informa serves hundreds of firms, institutions and trade organizations worldwide from our headquarters in Memphis, Tennessee. Informa also maintains offices in McLean VA, St Paul MN, Winnipeg MB (Canada), São Paulo (Informa Economics-FNP), London and Brussels (Agra CEAS) and Washington DC (WPA). Informa s broad categories of services include: Management Consulting for Agribusiness; Commodity Market Analysis and Evaluation (Agriculture and Energy); Risk Management Strategies; Education and Training; Newsletters and Other Publications; and Transportation, Industrials and Energy Market Analysis. The company s professional depth and experience allow us to provide a wide range of services related to the economic and management concerns of clients, as well as to focus on broader issues concerning markets, facilities, resources and many others. In addition, Informa Economics is a world leader in the collection, analysis, and dissemination of agriculture and food information. The Informa team has also has extensive experience in agricultural policy analysis, especially since many employees formerly held senior policy, analysis or advisory positions in government; worked for major trade associations; held positions in land grant universities; or held senior management positions in leading agribusiness companies; most hold advanced degrees in agricultural economics or related fields. (For more information on Informa Economics, its staff and the services it provides see