Security Exchange News

US-UK Bilateral Trade Deal

13 August 2020
 


The authors are aware that the range of products, services and trade agreements included in the potential bilateral trade deal between the UK and the US will be extensive. However, to examine all aspects is beyond the intended scope of this report. Therefore, this report will concentrate mainly on the associated post-Brexit relations between the UK and the EU and subsequent newfound trade agreements which are proposed between the UK and the US. Concerns relating to standards of food hygiene have gained much attention, should this trade agreement be ratified, and we will attempt to examine the arguments for and against.

Introduction

It’s never long before the issue of chlorinated chicken enters the debate when a UK/US trade deal is discussed. Washing the prepared bodies of chickens with chlorine is a practice used in the US. However, in the UK, consumers are concerned that pre-treating chicken in this way means lower hygiene standards that could put people at risk. In 2018 and 2019 a survey carried out by Which Consumer magazine asked consumers for their reactions relating to food standards and labelling in respect of chlorinated chicken. Responses included ‘Chlorinated chicken sounds terrible’ and ‘Chlorine belongs in the swimming pool and not in our food’. UK concerns around chlorinated chicken have been dismissed by the US as ‘unfounded’. A senior US official, Ken Isley, has criticised the EU food standards as ‘old-fashioned’ and ‘not based on modern science and technology’. These are the standards that the UK currently enforces as we approach the post-Brexit era. In this paper, Security Exchange specialists discuss the issues raised.

Background Information

As the UK leaves the European Union (EU) and enters the Brexit transition period, the government is preparing us for a more global approach towards trade.  As part of its efforts to negotiate bilateral deals and free trade agreements (FTAs) with other non-European countries, the UK has promoted a new deal with one of its historical trading partners, the US.  Upon leaving, the UK will not be obliged to adhere to the EU’s strict food safety laws, agricultural rules and quality standard guidelines.  In March 2020, the European Commission (EC) notified stakeholders of the UK’s withdrawal from the EU food legislation. However, on 31 December 2020, the UK will be designated a ‘third country’ and after this date, in order to be allowed to send animal-origin food products to EU markets, they will once again be obliged to comply with those strict standards.  

The EC enforces legislation on several sectors in the food industry, including directives for genetically modified organisms (GMO), the use of pesticides and herbicides, labelling, quality and organic certification, audits, animal welfare, environmental impact, food fraud and numerous other areas. The EC imposes stringent measures on food trade amongst EU members and regional and international deals that are often regulated by the World Trade Organization (WTO). In February 2020, the Council of the European Union authorised the opening of negotiations between the UK and the EU. It was proposed that so-called sanitary and phytosanitary measures (SPS), ‘should build on and go beyond the WTO standards, with the objective of facilitating access to each Party’s market while protecting human and animal health, as well as plant health’.

In the US, President Donald Trump’s administration has already made clear its desire for the UK to significantly reduce, or abolish altogether, some of its strict regulations on food safety and standards. The US government highlighted plans to, ‘establish a mechanism to remove expeditiously, unwarranted barriers, that block the export of US food and agricultural products in order to obtain more open, equitable, and reciprocal market access’. It also aims to ‘provide for enforceable and robust SPS obligations that build upon the World Trade Organization (WTO) rights and obligations … making clear that each Party can set for itself the level of protection it believes to be appropriate to protect food safety and plant and animal health in a manner consistent with its international obligations’.  However, during negotiations between the US and the UK, the UK government reiterated that it will, ‘uphold the UK’s high levels of public, animal, and plant health, including food safety’ and that the ‘UK’s current food and product standards should be maintained and not negatively impacted by a Free Trade Agreement with the US’.

These positions, which appear to be at odds with each other, form the nub of the negotiations.

A government spokesperson told the Financial Times ‘This government has been clear it will not sign a trade deal that will compromise our high environmental protection, animal welfare and food safety standards. We are a world leader in these areas and that will not change’.   The first round of trade negotiations between the UK and the US – which included discussions on SPS and market access for agricultural goods – happened in exceptional circumstances in May 2020 amid the global coronavirus pandemic.

First steps were taken towards the US and UK discussing the real possibility of a bilateral trade agreement as far back as July 2018.  In a review carried out by UKTPO, entitled Briefing Paper 4, four conclusions were summarised.  First, while public support for a UK-US trade deal existed on both sides of the Atlantic this was tempered by concerns about existing trade agreements. There were also points raised in terms of the regulatory framework that a UK-US agreement would entail.  Second, to be meaningful, an agreement between the UK and the US would need to deal with barriers to trade in services as well as in key manufacturing sectors.  Third, and by far the most taxing issue, would be how the UK navigates (and indeed reconciles) the different and conflicting regulatory regimes operated by the EU and the US to the satisfaction of all three parties. Fourth, the UK would need to have settled its position in the multilateral trading system before meaningful negotiations with the US could commence.

Since the review, notable domestic and global events have taken place; Brexit was not delivered as promised in 2019, and a new Government was formed headed up by Boris Johnson.  Then significantly, the pandemic crisis, Covid-19, cast its deadly shadow across the world.  In terms of the US, the intervening period has witnessed an escalation of trade tensions on a global scale, particularly between the US and China.

As we enter the next stage of Covid-19, political attention has again turned back towards Brexit and the continuing trade deal discussions between the UK and the US. In 2018, several meetings were held between US and UK officials in the so-called Working Group that was laying the foundation for a proper negotiation which would commence as soon as the UK was free to enter one.  However, things have not run smoothly during discussions. 

Tensions between London and Washington were exacerbated by the leaking of comments made about the Trump administration by the UK ambassador to the US, Sir Kim Darroch, leading to his resignation and criticism by President Trump of Prime Minister, Theresa May’s handling of the Brexit negotiations.

UK Food Safety Standards – Post-Brexit

With regards to the UK being prepared for the Brexit deadline of 2021, officials in parliament are preparing to revise food safety regulations to shift authority from the European Union (EU) back to domestic law and jurisdiction.  All such revisions need to be in place before the UK’s self-imposed Brexit deadline of January 1, 2021.  In terms of important aspects of food safety, security and sustainability, academic commentators have reported that it is unlikely that the UK will be adequately prepared for the effect Brexit will have on the UK food system.

It is in recognising the difficulties and potential pit-falls which may lie ahead that has spurred the UK Food Standards Agency [FSA] to try to ensure that UK citizens enjoy the high standards of food safety and consumer protection once the UK leaves the EU. Claims made by the FSA are that throughout the transition period and beyond we are committed to ‘having in place a robust and effective regulatory regime which will mean business can continue as normal’.

In the lead up to the Brexit deadline, EU food safety legislation will remain in place, giving a certain degree of confidence to food producers, importers and exporters. The major concerns relate to what happens once the UK finally leaves the EU.  Despite the reassurances offered by ministers and the FSA, widespread concerns exist relating to the weakening of food safety standards and potentially less stringent legislative frameworks.

Legislation introduced in 2018 entitled The European Union (Withdrawal) Act of 2018 allows specific EU laws to be directly transferred into UK law. Current thinking is that the UK will simply tinker with EU ‘retained laws’ by way of introducing secondary legislation, called ‘statutory instruments’.  This strategy will also empower named agencies with responsibility for the enforcement of specific areas of food safety standards.

For the FSA, Brexit offers an opportunity to review current food safety standards and propose an up-to-date strategy for ensuring food safety assurance. In launching its booklet, ‘Regulating Our Future’ the FSA set out a vision of ‘modernising the way food businesses are regulated’ through the creation of a ‘system that is modern, risk-based, proportionate, robust and resilient’.

Advocates of the new ‘Regulating Our Future’ strategy proclaim that the FSA have re-confirmed the importance of protecting UK consumers. The essential tenet is that the UK will continue to be, ‘a strong, credible player in the global food economy’.  There can be no doubt though, that a departure from the EU community will encompass a change in patterns of food production, trade and consumption.

The FSA’s new strategy will propose a regulatory system that will be flexible and responsive, built on principles which include:

  • Businesses must be responsible for producing food that is safe and must be able to demonstrate that it is as described
  • Consumers have a right to information which will help them make informed choices about the food they buy – businesses have a responsibility to be transparent and honest in their provision of that information
  • FSA and regulatory partners’ decisions should be tailored, proportionate and based on a clear picture of UK food businesses
  • The regulator should consider all available sources of information
  • Businesses doing the right thing for consumers should be recognised; action should be taken against those that do not
  • Businesses should meet the costs of regulation

The authors of this paper suggest that the new FSA strategy will be the catalyst for change. The desire to improve the regulatory framework is also evident at the international level. The USA, and in fact other global entities, must recognise the need for global harmonisation of food safety standards to enable trade agreements to be functional and adopted.

Concerns relating to US Imported Food Products

Over the years, there have been many food scares that have tested the resolve of the British public.  Mad Cow’s disease and the Horsemeat Scandal are two examples which have revealed the risk averse nature of UK consumers towards food safety standards.  This has been further demonstrated through public surveys carried out by consumer magazines such as Which.  Consistently, consumers have demonstrated a level of concern towards issues such as genetic engineering of food, chemical food additives, animal welfare, wildlife impacts and food irradiation.

In terms of trade relations with countries such as China and the US, the UK has stood firm with our European allies in questioning the integrity and food safety assurance of food items intended for import to EU members by the US.  Evidence to support this exists where artificial hormone-injected cattle were rejected by the EU although the decision went on to be overturned by the World Trade Organisation.

As we move towards 2021, a new dawn is approaching. Exposed by the Brexit process, the UK is now under increased pressure to look towards the US for a favourable trade deal. Many commentators have warned that standards of quality, safety, animal welfare and environmental upkeep will be seriously compromised.

The perception gaining pace amongst consumers is that there is a real possibility that the US will be seriously influencing the quality of the food which will be served on the UK’s dining room tables. This could include a menu of chlorinated chicken, hormone injected beef, genetically modified food items and food produced with pesticides that are banned in the EU on health and environmental grounds.  Looking to the government to protect the high standards of food hygiene which the UK has been renowned for offers little or no comfort to consumers.  Recently, during a third reading of The Agriculture Bill which will become the most important farming legislation in generations, it was reported that it has been rewritten so as not to ensure minimum standards to protect UK food standards.

The following represents the fears consumers allegedly have in relation to accepting US imported foods:

  • Chlorinated chicken
  • Beef cattle and dairy cows injected with synthetic hormone treatment which could lead to increased cancer and early puberty in humans
  • Pigs treated with the beta-agonist drug Ractopamine, which has hormone-like bodybuilding effects
  • Food affected by broad-spectrum insecticides (permethrin) classed as a possible carcinogen
  • The presence of pesticide residue which could represent a danger to wildlife and consumer health
  • Unlabelled genetically modified food items and ingredients
  • Gene-edited foods which have been associated with the growth of superweeds
  • Hi-tech ingredients permitted in ultra-processed foods, petroleum-derived food colourings, azodicarbonamide - the chemical used to bleach flour that has been linked to asthma - and potassium bromate.  The latter is a chemical that reduces the time needed to bake industrial bread and has been associated with kidney, nervous system and gastrointestinal disorders
  • Overuse of antibiotics which increase bacterial infections in both animals and humans that are resistant to key groups of these vital drugs

Protesters have raised concerns relating to the issues highlighted above and others, suggesting that lower costs of US imported food will make them more attractive to food manufacturers and importers.  The fear is that manufacturers will start to supply consumers with compromised food products which in years gone by may not have been considered wholesome in terms of ‘nature’, ‘substance’ or ‘quality’.

UK - Overseas Trading

The UK entered post-Brexit trade negotiations with both the EU and US in the early part of 2020. These talks were suspended due to the Covid-19 pandemic. Many officials were sceptical that agreements between the UK and the EU could have been reached by the end of the year, even without the interference caused by the virus. The knock-on effect of all this is that unless the transition period is extended, World Trade Organization default terms will be adopted in January 2021.

Within the next three years, the UK is seeking to secure free trade agreements with countries covering eighty percent of U.K. trade.  Talks are gathering pace with countries such as New Zealand, Australia, Japan, and the US.  In terms of the EU, officials believe that the trade deal which the EU currently has with Canada would be attractive to the UK.  This is based on minimal tariffs and includes cooperation on maintaining safety and quality standards through border inspections on imported goods.  Prior to the EU entering into such a trade agreement, the Canadian government had taken steps to ensure that regulations had fallen in line with the EU’s.  This is something which the UK is looking to change in its negotiations with the EU.

In terms of a US and UK trade agreement, it is estimated that US-UK total trade was valued at nearly £221 billion in 2019. With the agreement, the UK government estimates that it ‘could increase trade between both countries by £15.3 billion in the long run, in comparison to 2018, and increase UK workers’ wages by £1.8 billion’.  The government assumes that the ‘long run’ is a period of 15 years from implementation.  Data from the US Bureau of Economic Analysis show that the US Foreign Direct Investment (FDI) in the UK was worth $758 billion in 2018. The UK International Trade Secretary, Elizabeth Truss, adds that the US deal could deliver a £3.4 billion lift to the UK economy.  However, despite some initial optimism, those projections were made months before the coronavirus damaged both countries’ economic activity.  There is hope that a successful US-UK trade deal could help both countries on the path to economic recovery, but at what cost?  And what are the challenges – including public opinion – that the UK could face towards the implementation of an FTA with the US?  Compromising of food standards and therefore arguably placing UK consumers at risk is a major concern to political and food industry experts.  If the UK government bows to pressure placed on it by the US Administration, the flow of imported chlorine-disinfected chicken, hormone-treated beef and genetically modified food from the US could be a realistic option facing UK consumers.  This is despite Boris Johnson’s continual insistence that there would be ‘no diminution in food hygiene or animal welfare standards’.  

US Approach to Food Production  

Chlorinated Poultry

Chlorine-washing poultry and hormone-treated beef are both legal in the US. Farmers can also use types and quantities of pesticides that have been long banned or more tightly restricted in the UK.  This type of food production can make food cheaper and more readily available for the consumer.  In this section, Security Exchange’s US Food Specialist, Paula Piontek, provides a description of this type of food production.

The US has approved numerous safe usage levels of antimicrobial agents for use in the meat and poultry industry.  Options for safe, natural antimicrobial agents include use of natural agents such as vinegar, spices, celery and cherry powder, among many others per the FSIS Directive 7120.1.  As is common practice in the UK, the US has inspectors onsite to review, monitor and routinely test the meat and poultry products as well as monitor the processing environment to ensure food safety standards are being maintained.

US meat and poultry may be treated with FSIS and USDA approved antimicrobial rinses to remove harmful bacteria.  These rinses are often referred to as Microbial Intervention Steps in the US food safety plans referred to commonly as Hazard Analysis and Critical Control Point (HACCP). After the poultry is harvested and the carcasses eviscerated, they are examined and then undergo a “final washing procedure”, where approved antimicrobial agents are applied as a spray or wash on the processing line, “or as an additive to the water used to lower the carcass temperature”.

It is estimated that around 156 million poultry are eaten a week in the US with consumers feeling no ill effect. It has been suggested that “adults would need to eat 5% of their bodyweight in chlorinated chicken each day to be at risk of ill health from poultry alone.”

Paula outlines that the washing of poultry with antimicrobial agents, which may include chlorinated agents, is fundamentally designed to manage the presence of pathogens such as Campylobacter and Salmonella types of bacteria. Citing a report produced by the Adam Smith Institute, Paula suggests that with the use of regulated levels of antimicrobial agents in the United States studies show that it reduces the prevalence of Salmonella from 14% in controls to 2%.  In contrast to these levels, EU chicken samples typically have 15-20% Salmonella.  According to an FSIS USDA report Evaluation of HACCP Inspection Models published in 2011, data collected from 2006 to 2010 indicate using HACCP based models including appropriate sanitation programs, the USDA verified compliance to food safety standards has reduced the incidence of Salmonella significantly, providing US consumers with confidence that the poultry they consume is safe.  Consider that the US produces 50 percent more poultry than the entire EU, with the use of the internationally accepted HACCP systems: safe foods will be the outcome.  

As per EU/UK claims that the use of antimicrobial treatments like chlorine washes compensates for poor hygiene behaviour elsewhere in the supply chain, Paula believes this assumption is based on protection of trade as opposed to basing the use of antimicrobial agents on scientific fact. The EU is acting to protect the right of EU based poultry farmers who will find it challenging to compete with the price of poultry which is safe to eat but imported from the US.  It has been suggested that British consumers could enjoy much better-valued poultry if the ban on chlorine or other antimicrobial treatments were lifted. US methods produce fresh chicken at 79% of the price of equivalent birds on British supermarket shelves.

Paula also comments that using chlorinated intervention steps is not uncommon in other food safety systems.  Specifically, it is common practice to use chlorination for safe drinking water systems in both the US and UK.  The perception that chlorination will remain at levels that may impact the health and safety of persons using these products is validated with scientific evidence.  Most fresh produce processors also utilize antimicrobial agents to wash produce from fields prior to packaging and sale in markets.  With the use of internationally recognized HACCP systems, consumers can confidently continue to rely on the variety and choice of food options globally.

One area of concern in the US relates to chickens imported from China. In a nutshell, the USDA currently allows chickens reared in the US to be shipped to China for processing and then reshipped back to America labelled as “grown in the USA’.  As of this date, the US is reconsidering these practices due to ongoing international relationship differences between the US and China.

Security Exchange specialists highlight the fact that many US consumers are expressing concerns relating to food safety standards associated with the processing of poultry in China. Increasingly, there is a demand for transparency relating to where and how chickens are being processed in China prior to being reshipped back to the US and the consumers' table. In agreement, Paula outlines the fact that USDA has highlighted flaws associated with China’s poultry slaughter system claiming that ‘it is not yet equivalent to that of the United States in terms of food safety practices’.

Concerns relating to practices taking place in China include:

  • Toxic soil and water pollution in some areas of China causing growing concern over the safety of food produced in that country
  • China’s food safety standards not meeting those demanded in developed countries

Delving deeper into the root cause of this practice, commentators have suggested that the reason for the current method of processing chicken is due to economics. It has been estimated that the average wage for chicken processors in the USA is $11 per hour; compare this with the average wage in China which is estimated to be around $1 to $2 per hour.

Hormone Affected Beef

Much confusion and concern surround the use of hormones in beef production. The Beef War, as it is often named, has caused much controversy.  The opinion of the EU and UK is that such practices should be prohibited.  Indeed, in 1989 the EU/UK placed a ban on the importation of US beef thought to be treated with recognised artificial beef growth hormones. Originally, the ban covered six such hormones but was amended in 2003 to permanently ban one hormone —estradiol-17β — while provisionally banning the use of the five others.  ‘Johnson, Renée, "The US-EU Beef Hormone Dispute". Federation of American Scientists, Congressional Research Service’.

The ban imposed by the EU proved to be controversial. Both the US and Canada appealed the ban on the sale of their exported beef products on the grounds that there was an absence of scientific evidence to suggest that the exported beef products presented a health and safety danger to consumers. The World Trade Organisation (WTO) Settlement Body found in favour of the US/Canada – overturning the concerns raised by the EU.

Security Exchange meat specialist, Eric Smith, outlines the fact that hormones are natural chemical messengers which are produced in the body, to regulate essential physiological functions including reproduction, metabolism and growth. Eric goes on further to explain that hormones such as oestrogens or androgens are often administered to growing cattle intended for slaughter to promote growth by complementing the effects of naturally occurring hormones. The main aim of using such hormones is to encourage muscle development whilst reducing fat. This development in cattle takes place whilst ensuring efficient use of time, resources and provides economic gain allocated to the meat being produced.  

Moving on to consider the safety aspect of using naturally occurring hormones, the EU and UK have considered such practices as potentially harmful to health. This is an argument countered by Security Exchange’s Paula Piontek.  She says, ‘While I appreciate the specific concerns of the EU and UK with regards to a possible increase in oestrogen hormone levels in beef compared to non-implanted cattle, I stress that this concern must not be taken out of context with respect to actual amounts consumed and the levels found in other products’.

Furthermore, levels of oestrogen in implanted cattle are monitored regularly by both the FDA (regulates the development and use of hormone implants) and USDA (routinely monitors residues of synthetic hormones in meat). This activity should provide consumers on both sides of the Atlantic with confidence that hormone-injected beef is safe to eat.  

In addition, the US is producing increasing amounts of meat and poultry products that meet the USDA certified humane, organic and natural guidance. Many facilities opt for enhanced animal care programs with no use of hormones or antibiotics, green environmental practices, along with USDA certified feed programs for these farms.

Conclusion

Regulatory differences between the UK and the US towards environment and food safety standards are expected to be two of the major challenges in the negotiations over a future trade relationship. The US also considers that agriculture could be one of, ‘the most contentious issues in negotiations’.   US Trade Representative Robert Lighthizer considers UK regulations to be highly protective.

Since the UK government started to scout the global markets for FTAs during the government of Prime Minister Theresa May, there have been reports that powerful and influential US companies have been lobbying to pressure the UK government to drop some of its standards. A range of issues that are highly controversial, both in the UK and the EU, have been put on the table for discussion, including the relaxation on the trade of hormone-grown beef and chlorinated chicken.

Levels of public trust will also be an essential aspect on a future US-UK trade deal, with concerns being raised over the government’s approach on lowering standards on farming and food to quickly secure an agreement. Pressure has been exerted on Prime Minister Johnson’s cabinet, especially from the National Farmers Union (NFU) and some environmental groups.  Although key to the UK economy after months of stagnation due to Covid-19, guarantees for British farmers will be vital for the government if it is to succeed.

In the middle of the coronavirus pandemic and with a US presidential election on the horizon, negotiations for a comprehensive agreement between the UK and the US could face significant delays. While Prime Minister Boris Johnson attempts to secure fast-track FTAs ahead of the end of the EU transition period and without any confirmed` post-Brexit agreement with the EU, this may force the UK government to make concessions on several issues in the US-UK FTA, especially regarding food standards and agriculture.

According to The Financial Times, senior UK officials have concluded that no deal with the US could be reached until the end of the year.  US trade representatives also claimed that a deal before the end of 2020 is highly unlikely, however UK International Trade Secretary Truss said that there is no deadline for its conclusion. The UK has already experienced the challenge in the EU-led negotiations with the US during the TTIP years.  With negotiations ongoing, the EU will keep a close eye on the concessions that the UK government will make on US requests on food safety.  A UK government report has already highlighted demands from interested parties that the government must launch a science-based approach instead of strict EU rules on food safety. The Crop Protection Association has previously accused the EU of becoming, ‘the museum of world agriculture, with the politicisation of the regulatory approvals process and misuse of the precautionary principle’.

The current political debate relating to food hygiene standards and trade deals is creating much controversy.  As the UK begins to pull away from the EU and considers alternative trading arrangements with partners across the world, the fine balancing act between offering financial benefit to the consumer and ensuring that established food hygiene standards remain intact must be considered carefully.

Venturing into new trade deals with non-EU countries will also require careful consideration. The UK has invested heavily in establishing food hygiene standards.  Many of these standards have been developed following food scares such as Mad Cow disease, Swine Fever, and the Horsemeat Scandal to name but a few.  Being the envy of the world, it is perceived that there is a real risk of such standards being seriously undermined by UK politicians with a focus on landing the ‘big’ trade deal with countries such as the US.

Undoubtedly, there are arguments on both sides. The UK believes that the US fails to ensure the protection of food during the processes involved in ‘farm to fork’.  In the US, a counter-argument is that the UK, alongside EU partners, have used food safety guidelines which are out of date and are not based on a scientific risk approach.  The argument that US imported foods fall well short of consumer safety guidelines is seen as a smokescreen to protect EU/UK farmers and food manufacturers from a laissez-faire competition based on providing food at a much lower cost to the consumer.  

Looking to the future, there are serious implications as to how UK/US negotiations continue. If it is perceived that the UK is willing to lower food hygiene standards to encourage trade agreements with non-EU countries, other prospective trade partners such as Australia, New Zealand and Japan could cite the precedent of the UK/US arrangement as the basis to start trade negotiations.

Researched and written by Security Exchange personnel