The US Uses Equivalency for the First Time to Restart EU Molluscan Shellfish Trade

Fresh Oyster

United States

Published Oct 19, 2020

In late September, the US used the equivalence assessment for the first time to approve raw shellfish imports from certain suppliers from the EU, a ban that was placed since the 1980s. This follows a similar approval in 2018 where the EU used equivalency to allow raw shellfish imports from the US for the first time since 2010.

Raw Molluscan Trade Between the US and EU

In the 1980s, the US Food and Drug Administration (FDA) barred the import of raw shellfish from countries within the European Union as a result of public health concerns. This was followed by a similar decision in 2010, but by the EU to reject raw shellfish imports from the US due to unsatisfactory sanitation requirements.

The FDA’s regulations were overturned nearly 40 years later, in late September, when they announced that EU molluscan production had passed its final equivalence determination examination under a trade mechanism known as equivalency, permitting certain production sites in Spain and the Netherlands to begin exporting raw shellfish to the US.

This marks the potential final step of the US and EU relationship concerning molluscan trade after discussion regarding the subject restarted in 2010, when FDA first began the process of equivalence assessment on EU shellfish, and in 2018, when the EU finalized their equivalence determination process on the US, allowing the importation of raw molluscan shellfish from certain sites in Massachusetts and Washington.

Equivalence Determination and its Relevance to the Shellfish Industry

Equivalency is a trade term formalized by the World Trade Organization (WTO) that describes when the safety and sanitation standards for agricultural products of two or more countries are determined to be of an equivalent level to one another. To determine such equivalency, each country inspects the industries of other involved countries for approval independently in a process referred to as equivalence determination.

This is especially relevant to the shellfish industry as molluscan bivalve shellfish are particularly vulnerable to sanitary issues due to the fact that they are often eaten raw; many of them are filter feeders, meaning that both their survival in farms and their quality after harvest are extremely dependent on the quality of the water in which they are raised in.

In fact, the establishment of the trade restrictions regarding shellfish that occurred between the US and the EU were a direct result of the strict sanitation requirements that each region had.

As a result, the usage of the equivalence mechanism in both 2018 and this September, which determined that the relevant production sites examined in the EU and the US met the satisfactory standards of safety and sanitation to equate the two industries, has essentially granted the trade regulations of molluscs more flexibility to allow for the export of shellfish between the two regions.

The Impacts on the Industry and Its Implications for the Future

While the EU is no stranger to the concept of equivalency, having used the mechanism frequently when negotiating trade terms with a number of countries including Brazil, Turkey, and Japan, this negotiation marks the first time the FDA used the equivalence mechanism on an agricultural deal. This landmark has the potential to unlock promising American industries, such as many other seafood sectors, for the international market that were previously hindered by strict safety and sanitation requirements.

Compared to the worldwide market, the US exports a fraction of the total export value of molluscs, having exported USD 451 million, or a 3.2 percent share, in 2018. In comparison, the EU exported a total of USD 1.1 billion in the same year, holding a 7.8 percent share as the second-largest region (percentage of EU exports: Spain 57%, UK 8.5%, Belgium 6.4%). The US is a larger importer than it is exporter, having imported 7.7 percent of the total mollusc import value in 2018, or USD 1 billion, while the EU imported 20 percent of molluscs in the same year, translating to USD 2.7 billion (percentage of EU imports: Spain 35.8%, Italy 34%, Portugal 8.74%).

Market Share Percentages of Major Exporters of Molluscs by Export Value in 2018 (HS Code: 0307)

Source: ITC Trade Map (HS: 0307)

As a result, all involved countries in this new mollusc negotiation are all major markets in the mollusc industry. In addition, all countries stand to benefit in terms of diversification in both exports and imports, especially as the EU will lose the UK completely by the end of 2020 due to Brexit. Molluscs are also currently not involved in the transatlantic trade war between the EU and the US, including the newly proposed list of tariffs released by the EU this October.