EU is facing a grilling over halloumi

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Hello from Brussels, where this week we should learn when the EU is planning to ratify the (sort of) tariff-free, quota-free trade deal it hammered out with Boris Johnson in the last embers of 2020.

Supporters of democracy and good governance might want to reflect on the fact that the European Parliament has now had nearly four months to scrutinise the 1449 page EU-UK Trade and Cooperation Agreement, the same tome that Westminster booted through in one day in December so as to avoid the spectacle of a no-trade-deal Brexit.

In the meantime, companies have been busily confronting the deal’s limitations, with the agreement already in provisional force. More on the impact of which in Charted Waters.

MEPs’ approval of the deal was put on ice earlier this year after disagreements flared up between London and Brussels over trading arrangements for Northern Ireland. But now things are moving. The text was voted through comfortably by the assembly’s committees last week, and parliament chiefs on Thursday will decide how to proceed. The widespread expectation is a ratification vote next week.

Today’s main item covers yet another food-related trade spat — this one on the EU’s efforts to aid reconciliation in Cyprus through new export opportunities for halloumi cheese.

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More cheese-related tensions emerge

Brussels and Cyprus last week announced that years of painstaking negotiation had delivered a long-cherished goal for the divided island: securing EU protection of delicious, chewy halloumi as a regional specialised delicacy.

Regular readers may recall that this is not the first time cheese has come up in Trade Secrets. There was, for instance, the time Stilton drove a wedge between the UK and Japan, with negotiations stalling after London called for a quota to export the blue cheese and other varieties under favourable terms.

The accord over halloumi is contentious in some quarters too. The reason being that the accord has implications far beyond the usual advantages enjoyed by other protected designations such as Parma ham and champagne: in this case, it has also opened up a rare opportunity for Turkish-occupied northern Cyprus to sell farm produce on to the EU market.

Normally, products such as cheese, which are covered by EU veterinary laws, can’t be sold on the EU single market if they come from northern Cyprus because those regulations are not in force in that part of the island. Turkey has militarily occupied the northern region since 1974, which it alone recognises as a sovereign state.

Up to now, the only exceptions have been for fresh fish and honey. In those two cases the European Commission took decisions that set specific conditions for those goods to cross the UN-supervised Green Line that divides Cyprus, allowing them to enter the EU single market. It is unclear how much has actually been sold in the EU’s other 26 countries.

Now, as part of the new arrangements for halloumi, a special system has been put in place that will allow cheese from the whole of the island to be sold across the EU, as long as it meets the bloc’s food safety standards.

The move comes ahead of UN-convened conflict resolution talks in Geneva scheduled for April 27-29, and Brussels hopes that the versatile cheese can deliver a diplomatic thaw. Josep Borrell, the EU’s high representative for foreign policy, has described the move on halloumi (which will also be protected under its Turkish name of hellim) as “a strong signal for Cyprus to resume settlement talks as soon as possible in line with UN parameters, towards a shared European future.”

While the arrangements have been championed by the government of Cyprus as a breakthrough for the whole island, some Turkish Cypriot leaders are not happy. The reason being that the way in which the deal is devised means that Turkish Cypriot hellim producers will have to comply with EU standards — something that lawmakers in the north view as handing far too much authority to the Republic of Cyprus government and the EU.

For EU purposes, Cyprus would become the only place on earth that genuine halloumi can be produced, protecting its industry from foreign alternatives that have become more commonplace as the popularity of the cheese has grown. Panayiota Patsali, head of the Energy and Trade Ministry’s Commerce Department, told local business paper the Financial Mirror that the authorities have had to defend “halloumi” in more than 80 international cases involving dairy producers trying to register their version of the cheese. Nicosia expects the popularity of the cheese to continue to soar in the coming years.

It’s already big business. More than 33,000 tonnes of the cheese were exported to the EU (bar the UK) in 2019, according to Cypriot government data. Brexit, however, has reduced the benefits of special arrangements for halloumi that only cover the EU market. More than half of Cyprus’s cheese exports to the rest of the EU went to Britain in 2019, the last full year of the UK’s EU membership, according to Eurostat data.

EU officials say years of work have gone into devising a system that respects Turkish Cypriot concerns and interests. The deal foresees an EU commission-chaired working group on halloumi/hellim that will involve representatives of both communities, and the EU will boost aid to the Turkish dairy sector to help it meet EU food safety norms. This is coupled with controls to make sure those standards are nonetheless rigorously respected.

An internationally accredited inspection body will monitor that the traditional recipe — involving varying proportions of sheep, goat and cow’s milk — is being respected, and a private inspection body will conduct inspections of farms and dairies in northern Cyprus.

Brussels estimates that there will be substantial economic benefits for both communities. At a more prosaic level, the EU also hopes that it will simply help people get along, encouraging practical co-operation across the green line in areas such as animal breeding.

Ultimately, the proof of whether the system works will be in whether Turkish farmers take up the opportunities the new arrangements offer, irrespective of what their politicians think. 

Charted waters

Despite a pick-up over the past month, trade flows between the EU and UK are still way down on last year — the result of a combination of Covid-19, Brexit stockpiling and a bevy of new non-tariff barriers. To get a sense of the effect of the decision to quit the EU, here’s a comparison of trade flows between the bloc and the UK, with those of a couple of the zone’s other big trading partners.

Line chart: Exports from the EU to major trading partners (€m) showing

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