Organic Trade is Changing in the EU…Are You Ready?

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On May 22ndthe European Council adopted new rules for organic production and labeling of organic products. One of the changes requires that existing trade arrangements be exchanged with trade agreements for all countries doing business with the EU. The new regulation will go into effect January 1st, 2021.

If you are currently exporting to or importing from the EU, it’s important to get engaged in the process now before the rules affect your business.

In 2016 the global organic market was $89 billion. Much of this was achieved through the global exchange of organic goods. Over 178 countries have some organic activity within their borders resulting in 87 unique organic standards that govern organic production.

Because there are so many different regulations, equivalency arrangements have been put into place to help facilitate global organic trade.

What is an equivalency arrangement?

Very simply it’s a tool to help open markets and reduce trade barriers. An equivalency arrangement says the organic standards of one country are just as good as or achieve the same end results as a partner country.

Equivalency allows products to flow back and forth smoothly without duplicate certification.

These arrangements happen after an arduous and meticulous review of both countries standards.

The US currently has 5 bilateral equivalency arrangements with Canada, Japan, South Korea, Switzerland and the EU.

Organic Arrangements Around the World_slide16 copy

The EU is an important trade partner

The US is by far the largest market for organic products, commanding 47% of global retail sales. The EU comes in second place at 36% of all global sales. Together we make up over 80% of all organic sales on the planet.

Organic demand continues to increase in the EU and is emerging as a true market segment. It is eating up US-grown lettuce, berries, carrots, apples, asparagus and onionsin great numbers. According to FAS trade data, those fruits and vegetables are the leading items being exported from the US into the EU.

US Organic Exports to the EU 2017_slide24 copy

Why did the EU overhaul their regulations?

The EU Council decided to have a more harmonized approach to how the regulations were implemented to level the playing field for all farmers. They were looking to simplify the process and make it less costly and easier to access.

Where are the key changes?

There are changes to the Production rules– basic clarification on how products can be grown – like container production or new products like rabbits, deer and even salt!

Livestock– think continuous improvement for humane livestock production, space, environment and feed.

Inspection requirements– grower groups will now be allowed to be certified. There will be greater oversight on unintentional contamination like drift or comingling.

Trade/Import– This is where things change for US traders. There will only be two ways to get your products into the EU: 1) get them certified to EU standard, or 2) the US must enter an organic equivalency agreement – not an arrangement.

They will officially move away from trade arrangements and move forward with trade agreements to manage the organic supply and assure integrity.

What’s the impact on organic trade?

All existing arrangements must be renegotiated as a trade agreement. This will require an act of Congress to execute. It will no longer be under the prevue of the USDA as it has been in the past.

What’s the timeline?

Official regulations have been adopted, and they are published in the EU gazette (think federal register). They are implementing the new requirements on January 1st, 2021

A new US Trade agreement MUST be implemented January 1st, 2026 or trade will absolutely stop.

How will we manage all these changes?

The Organic Trade Association (OTA) plans to shepherd the process. They will gather input from organic exporters and importers and hold regular check-ins with other trade associations like the UK’s Soil Association. This will ensure that everyone is working on the same list of issues.

In late 2019 OTA will conduct a side-by-side comparison of the NOP and the new EU regulations.

Once done we must muster up our political will to get an agreement passed in Congress!

OTA members will likely convene a task force to deal with the process as it unfolds. If you are interested in being involved, reach out to info@ota.com.

What about Brexit?

The organic regulations are just one detail out of 1200 that must be worked out. It’s assumed that the UK will use a carbon copy of what the EU adopts, and they will, in turn, have an agreement with the EU. At that point, the US will have to adopt a separate agreement with the UK.

Time to get moving on EU changes.

No one wants trade to be disrupted, so it’s in everyone’s interest to have a good plan in place to maintain the flow of organic goods.

This change won’t have an impact on the existing arrangement until 2026, and that might sound like a long-time form now, but it’s not! There is much work to be done before that date.

Two races

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