Chlorinated chicken and non-tariff barriers in trade deals

In the last couple of days chlorinated chicken has become headline news in the context of the potential US-UK trade deal.

For those of us who have worked on agricultural trade issues for some time, this is nothing new. Chlorinated chicken has been a constant irritation between the EU and US for nearly two decades. 

It is an issue which highlights the difficulties in the negotiation of all free trade deals. Most commentators focus on tariffs as the biggest obstacle to trade, yet in reality the biggest problem is non-tariff barriers, often focused on regulatory standards, which are the biggest blocks on trade and they are often the reason why trade deals take a long time to negotiate. 

Chicken standards are a classic non-tariff barrier, with different regulatory standards that aim to do the same thing, namely keep the public safe. 

EU chicken is banned in the US and US chicken is banned in Europe. This is because neither side recognises the other’s safety standards even though chicken in both countries is perfectly safe to eat. 

In Europe, chicken is washed in water at several stages during the process and no chlorine is used. The end result is that in Europe we have more cases of food poisoning caused by chicken than in the US. As a result the US deems European chicken unsafe and demands that US chicken is washed in chlorine. The EU had some worries that treating chicken with chlorine could, in extreme cases lead to cancer and has since 1997 banned US chicken imports. 

chlorine

So two different industries have developed, water cleaned in Europe and chlorine cleaned in the US. And here is where health issues get trumped by the economic imperatives so important to trade relationships. US chicken is on average 20% cheaper than European chicken, in large part due to the extra costs of repeated water cleaning during the process. 

So despite the European health bodies declaring nearly a decade ago that chlorinated chicken doesn't pose a health risk, it has been impossible to lift the ban because it would mean either that European producers would be undercut by a cheaper rival or that European production would eventually all migrate to using the chlorine method. 

So the opposition to chlorinated chicken is all about economics and nothing about health. It is as safe to eat chlorinated chicken as it is to drink tap water or to go into a swimming pool. If you have ever eaten chicken in the US, you have eaten chlorinated chicken.

However this doesn't mean that the economic elements should be ignored. After all trade deals are about agreeing a mutually beneficial system for both sides. 

UK chicken farms are highly efficient, they prosper without any subsidy from the CAP and their current operating models would be challenged if chlorinated chicken from the US was allowed in. This would mean that UK domestic rules would have to be changed to allow chlorine to be used domestically; otherwise they would not be on a level playing field. However this would move the UK away from EU rules and would almost certainly mean that UK exports to Europe would all have to be checked to make sure they met EU non-chlorinated standards. 

chickens

Here is the challenge implicit in trade deals. Adopting US standards mean moving away from EU standards, therefore making it harder to agree smooth customs arrangements with the EU. 

This example, chicken, amounts for only 0.2% of UK imports and this shows just how complex trade agreements can be. For years agricultural standards have blocked trade between the EU & the US. It would be good if we can break this impasse as the health justification for the blocks is wholly unjustified. However the economic ramifications are significant. 

The best approach would be to allow chlorinated chicken in, thus providing a strong symbolic victory for transatlantic free trade, and opening up a market for UK chicken in the US. In addition it should provide a bridge for other agricultural areas where UK exports are banned, such as beef and some cheeses. However initially the amounts should be limited through a tariff rate quota to deal with competition fears. In addition all chicken should be clearly labelled as to the production methods and through country of origin labelling. To date country of origin labelling has been strongly supported by the government but frustrated somewhat by European law. But in the end consumers should be allowed to make their own choice. I'm confident that the majority will continue to buy British, but a proportion of consumers will want to take advantage of the greater competition and buy imported US chicken. We should allow them to make that choice. 

This is one of many non-tariff barrier issues that exist in our trading relationships with every country in the world. With the US it is mainly agricultural issues, with Japan it is often regulations surrounding cars. With each country it is different and each one will be difficult to solve. Yet it is possible to solve them as long as there is willingness on both sides. That willingness definitely exists now with the US. We will have to wait and see if it will be enough to overcome the chicken issue and the many other NTBs to come, but it is good news that we are moving from the relatively easy discussions about tariff reductions to the real challenge in modern trade deals - the non-tariff barriers.