U.S., Europe to improve food chains after India bans wheat exports

PARIS — The United States and the European Union are looking at how to improve food supply chains with export restrictions from India and other nations accentuating global problems, the EU’s trade chief told CNBC.

G-7 foreign ministers warned over the weekend that the war in Ukraine is increasing the risk of a global hunger crisis. This is because Ukraine has been unable to export grains, fertilizers and vegetable oil, while the conflict is also destroying crop fields and preventing a normal planting season.

This has increased the reliance on nations from other parts of the world for these products. But some of these countries, concerned about supplies for their own citizens, have imposed restrictions on exports. This is the case in India, for example, which announced Saturday a ban on wheat sales “to manage the overall food security of the country.”

“That’s something which is very much of concern,” Valdis Dombrovskis, the EU’s trade chief, told CNBC Sunday about these new export measures.

“We agreed with the United States to cooperate and coordinate our approaches in this area, because … as a response to Russia’s aggression against Ukraine and a corresponding increase in food prices and concerns about food security, countries are starting to take export restrictive measures. And we think that this is a tendency which can only actually aggravate the problem,” Dombrovskis said.

He added that these measures, such as Indonesia’s ban on palm oil exports, “make matters worse.”

Limits on exports are likely to drive up commodity prices, and therefore food costs too. For the EU, this is a matter of food affordability, Dombrovskis explained.

The U.S. and the EU are having talks in France on Monday for their joint Trade and Technological Council, or TTC. The group was put together back in 2021 to restore transatlantic ties, after the Trump-era trade tariffs and disagreements.

However, the work of the TTC has now gone beyond its intended focus, such as semiconductor shortages, to incorporate and find solutions for current geopolitical issues.

Its first meeting, in late 2021, was overshadowed by the U.S. agreement to sell nuclear submarines to Australia — where Canberra decided to ditch a business deal with France, upsetting European officials. Now, its second gathering is dealing with supply shocks in the wake of Russia’s unprovoked invasion of Ukraine.

Speaking to CNBC Sunday, Europe’s Competition Chief Margrethe Vestager said she never thought the TTC would be discussing sanctions against Russia.

“I didn’t foresee this coming. I thought the TTC would be much more focusing on all the other issues … like, for instance, how to coordinate in standard setting organizations, how to make sure that we can create a coalition for people to be elected in organizations, how to work on the supply chains,” Vestager said.

“I think with the geopolitics that we have ahead of us that we’re in now, you know, if we hadn’t had the TTC, we’d have had to invent it,” Vestager said.

The EU’s competition chief was once dubbed by former U.S. President Donald Trump as Europe’s “tax lady” and often criticized for going after Big Tech. However, she says she has noticed recent a change in the transatlantic relationship.

“Things are very different from what we saw 2, 4, 6 years ago,” she said.

When asked whether Russia’s invasion of Ukraine served to revive the transatlantic bond, she said: “I definitely think so.”

“It has made it abundantly clear that like-minded [nations] must come together,” she said.