TTIP may mean higher prices and ‘unhealthy’ consumption: EC-backed report

By Nathan GRAY

- Last updated on GMT

Will TTIP leave European consumers unhealthier and out of pocket? A European Commission-backed draft report seems to suggest so. © iStock
Will TTIP leave European consumers unhealthier and out of pocket? A European Commission-backed draft report seems to suggest so. © iStock

Related tags: European union, International trade

The proposed EU-US TTIP trade deal could result in higher average prices, yet increased consumption of unhealthy foods, warns a draft EC report.

The European Commission-backed draft study​ warns that a deal could lead to an average consumer goods price increase of around 0.3%, but certain unhealthy commodities – such as sugar and alcohol – could see lowered pricing leading to higher consumption.

Monique Goyens, director general of the European Consumer Organisation (BEUC), said the prospect of raising average consumer goods prices "is not what consumers were told when negotiations kicked-off three years ago."

“Cheaper products were supposed to be the number one consumer benefit of a future trade pact with the US but that claim is now in jeopardy,”​ she commented.

However, the draft report itself notes that for most household groups such a price increase "is more than offset by higher wages"​, and that any increase in consumer prices could be overestimated because of not modelling a reduction in non-tariff measures (NTMs) in processed foods. 

“If TTIP affects food prices more strongly than other consumption goods, the expenditure impact for the poor will be larger than for other economic groups,”​ it adds.

A pinch of salt

Florence Ranson, communications director at the trade association FoodDrinkEurope, said suggestions that TTIP may impact consumer prices are "calculated on the basis of a specific model"​.

“As outlined by the report itself -  this economic model is limited. It is therefore impossible to judge,”​ said Ranson – who added that more generally speaking, FoodDrinkEurope is supportive of trade agreements, “as they help develop new markets and allow in particular the smaller players to export more easily.”

Furthermore, Cecilia Malmström, European Commissioner for trade, warned against taking the figures of the new draft report too seriously.

“Needless to say, being a draft version to now be scrutinised by stakeholders and others, this assessment should be taken with a pinch of salt,” ​said Malmström. “The economic analysis is based on modelling, with many assumptions and caveats.”

“We should thus be cautious when analysing numbers, especially when it comes to things like market data that may depend on many other factors,” ​she added.

Sector specifics & ‘unhealthy consumption’

In addition to outlining a potential rise in the prices of consumer goods, the draft report also hints at which sectors may see the biggest growths and shrinkages as a result of TTIP and spells out the potential for increased consumption of ‘unhealthy commodities’ due to lower prices.

“For ‘unhealthy commodities (tobacco, alcohol, sugars)’: We find that, indeed, tariff liberalisation … could lead to increased consumption of ‘unhealthy commodities’ since this may have a price-reduction effect. This could potentially affect the human right to health in the EU,” ​states the report. “This potential negative effect would be disproportionately higher for the lower income strata of the population (as food is a larger share of their expenditure).” 

The draft suggests that one of the ‘key economic sectors’ to see gains as a result of TTIP include the European beverage sector, adding that the main EU food and drink export products to the US are spirits, wine and beer – which make up 45% of all food and beverages products exports to the US. In contrast, the European meat industries could ‘lose out relatively’ as a result of TTIP, said the report.

 

 

 

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2 comments

US Unlikely to Level Playing Field on Alcoholic Beverages

Posted by Barry Clark,

The study anticipates that EU exports of alcoholic beverages would gain under TTIP. Currently, the US charges lower alcohol excise taxes on small to medium domestic producers than on imports. It is likely that the US will soon pass a law that will further discriminate against alcoholic imports. For example, the current tax on distilled spirits is $13.50/“proof gallon.” The new law would reduce this for domestic producers by 80% for the first 100,000/year, to $2.70.

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no unhealthy food commodities!

Posted by Dieter E,

salt, alcohol, fat, sugar and many more are 'healthy'; for example: a life without salt would result in early death!
It is a fabulous tale that marginal price changes in consequence of TTIP would change the consumer behavior from 'normal' to less healthy.

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