The impact of the Transatlantic Trade and Investment Partnership on the European demand of US and EU meat.

The potential free trade agreement between the United States and the European Union aims at improving market access through lower trade costs. The agricultural sector is one of the most affected by tariffs and non-tariff measures. European agricultural producers are protected by the Common Agricultural Policy from international competition. In this context, trade liberalization would represent a serious threat. Even though trade barriers are reduced and/or eliminated, gains are likely to be limited by a “home bias”: consumers are willing to pay higher prices for goods produced at home, rather than foreign goods. However, some researchers have highlighted the heterogeneity of meat preferences of EU consumers and found a market potential for US beef in the European meat market. EU regulations are currently limiting US-EU meat exchanges while there may be a demand for US beef, swine and poultry and possible gains in agriculture. In order to represent all the forces playing a role in the demand for EU and US meat, we use a demand model with nested CES preferences to compare a baseline scenario (before the policy change) with a scenario including the policy change. Two levels of Armington elasticities are defined to evaluate the impact of a higher substitutability between US and EU beef, swine and poultry. Results show that the European demand for US meat increases after the TTIP with a more pronounced increase when the Armington elasticity is higher. On the contrary, European demand for EU meat shows a decreasing trend.