Europe’s F2F Strategy = CAP 3.0

At the end of May, the EU released its ‘Farm to Fork’ strategy (F2F).
The future regulation – when implemented – will undoubtedly impact every facet of agricultural trade between the EU and its ‘partners’.
And while the ‘Farm to Fork’ is a catchy phrase that evokes sunny afternoons in Europe’s farmers’ markets – such as the famous Chatelain Wednesday market in Brussels – this is nothing more than an old-fashioned protectionist play aimed to protect and prop-up European agriculture at the expense of foreign imports.
Let’s be honest: this is good politics.
But let’s also call for what it is: the return of the ‘Fortress Europe’ Common Agriculture Program (CAP) and a Brussels bureaucratization of the local food movement.
From EU Green Deal to Farm to Fork
The Farm to Fork Strategy is the agriculture sector’s iteration of the EU Green Deal, which was unveiled by the new European Commission at the end of 2019. The EU Green Deal is the EU’s overarching climate strategy; its main objective is to have the European Union become carbon neutral by 2050.
On paper, the Farm to Fork document mostly concerns what is taking place in the EU itself. There are ambitious targets for increasing the amount of food that is grown under organic systems, for example.
However, the strategy also seeks to prevent imported greenhouse emissions.
If a country wants to reduce its emissions to zero, it can outsource those emissions to other countries. An ongoing debate in the EU concerns how much it has outsourced its industrial emissions (e.g. steelmaking) to China.
Lower emissions targets mean higher environmental standards, higher costs and less competitive products. European steelmakers are now talking about EU standards for steelmaking plus a tax adjustment for higher emissions. Farm to Fork lays out the same idea, but for food and agriculture.
This is where the regulation diverts from a domestic support program to a trade protectionist tool – similar in many ways to the RED II Directive, which also implemented naked trade discrimination poorly hidden behind a fig leaf of environmental concern.
Despite this being transparently protectionist, there are two ways the EU is seeking to enforce Farm to Fork against imported commodities. First is via standards and trade; second is the use of labelling.
Standards and Trade
On trade, the strategy states:
The EU will seek to ensure that there is an ambitious sustainability chapter in all EU bilateral trade agreements. It will ensure full implementation and enforcement of the trade and sustainable development provisions in all trade agreements, including through the EU Chief Trade Enforcement Officer.
EU trade policy should contribute to enhance cooperation with and to obtain ambitious commitments from third countries in key areas such as animal welfare, the use of pesticides and the fight against antimicrobial resistance.
The EU will strive to promote international standards in the relevant international bodies and encourage the production of agri-food products complying with high safety and sustainability standards, and will support small-scale farmers in meeting these standards and in accessing markets.
The big problem here is that the EU is likely to seek to set its own standards for agriculture and food production.
In our view, this is just lipstick on a pig: the next iteration of the Renewable Energy Directive (RED II). Under RED, the EU set its own arbitrary standard for high- or low- ILUC risk for commodities. This was totally discriminatory. 
The ILUC methodology is fiction. Under international trade rules, any technical barrier to trade needs to be ‘scientifically justified’ – this includes any risk assessments. The methodology for assessing risk of indirect land use change – and therefore emissions — is arbitrary at best. It was put together in a way to discriminate against palm oil in a targeted manner, no matter where it was produced.
The RED II is now the subject of a WTO challenge by Indonesia.
There have been some voices in the palm oil industry that have not thought this is relevant, arguing that the RED only applies to biofuels, and so food exports would be spared. This was highly naïve, and betrayed a misunderstanding of how the EU operates in reality. POM has consistently warned the sector that once ILUC was successfully introduced similar methodologies would be integrated into new regulations and applied to food and other products.
So, it’s therefore likely that the ‘standards’ imposed for food and agricultural production will be similar to those aimed at biofuels. Again, the objective will be to keep imported food products out, and to maintain policies that protect the EU’s farm sector.
The language on small farmers, in our view, is nothing more than lip service. The EU has already heard the voices of smallholder oil palm farmers when it comes to accessing EU biofuel markets, and it has blatantly and callously ignored them.
The second part of the Farm to Fork Strategy that exporters need to be aware of is the use of labelling. It states: 
The Commission will also examine ways to harmonise voluntary green claims and to create a sustainable labelling framework that covers, in synergy with other relevant initiatives, the nutritional, climate, environmental and social aspects of food products.
Labelling for foodstuffs has always been problematic when it comes to sustainability. In most jurisdictions, labelling claims – whether it is for nutrition or environment — need to have some basis.
The creation of environmental standards under the Farm to Fork strategy will precipitate the development of a labelling framework. This effectively solves a major problem for EU member states when it comes to the labelling of palm oil.
The EU’s Food Information to Consumers Regulation prevents the use of labelling on foods that attributes properties that don’t exist; there are regulations that also prevent the broad use of ‘comparative advertising’, i.e. implying one product is better than the other because of an ingredient.
The use of ‘no palm oil’ labels has come under considerable fire in the EU for precisely these reasons.
But a new sustainability labelling regime within the EU will create problems for any major exporter of commodities, particularly when it covers both social and environmental aspects of food products and food exporting nations.
A new regime of standards and labelling is precisely what protectionist EU food producers have been seeking. Such a regulation is a perfect opportunity for less-competitive European industries – e.g. rapeseed and sunflower farmers – to hobble their competitors that export to Europe.
In the past, Green and protectionist MEPs have been more than willing to impose such regulations on importers while ignoring similar (or worse) infractions by European producers. Will this be ‘déjà vu’ all over again?
A Way Forward
The Council of Palm Oil Producing Countries (CPOPC) has stated that it will cooperate and work with the European Union on the Farm to Fork strategy going forward. The EU has already laid out its timelines for implementation. It is looking at finalizing proposals for EU marketing standards, for example, next year.
So what could cooperation look like?
In the past, EU policymakers have said they will cooperate and consult with palm producers, but has in reality ignored them completely.
In our view, palm oil producing nations need to put their markers down early and consider the leverage they have.
Indonesia has and will continue to be a major prize for European exporters. Indonesia has recently completed new trade agreements with Australia and Korea, is revising another agreement with New Zealand, and is on the cusp of signing the RCEP agreement, which will create a free trade area extending from New Zealand to China. 
The EU-Indonesia agreement should provide another set of disciplines – in addition to the WTO — that may be able to rein in any excesses of European policy. Any dispute settlement mechanism in the agreement should provide a forum for precisely this.
At the same time, Malaysia and Indonesia showed last year what was possible when they worked together on the palm oil issue by preventing the upgrade of EU-ASEAN cooperation agreement to a strategic partnership. A clear signal that Brussels will struggle to make diplomatic inroads into ASEAN without good-faith cooperation needs to be sent.
After all, this won’t just impact palm oil. The Thai fishing sector and rice growers in Cambodia and Myanmar are all likely to be impacted by Farm to Fork. Strength in numbers is the place to start.
However, Indonesia will likely need to move unilaterally in order to gain momentum. The WTO case against RED II showed that its palm oil allies were not reliable partners when the chips were down. An opening salvo at the WTO TBT – via a simple statement – would find a number of international allies outside the region, such as the United States, Canada, Australia and Brazil.
Similarly, the ‘trade impacts of the EU Green Deal’ should be in the ‘to do list’ of every foreign ministry or trade ministry staffer that is dealing with the EU. It can be added to the broad list of concerns: RED II, Countervailing Duties on Biofuels, and the IEU-CEPA.
What needs to be remembered is that if Brussels wants to make inroads into ASEAN, it needs Jakarta onside – and it needs to treat Jakarta with the respect it deserves.