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Friday 16 November 2018

Crucial month ahead on several fronts for EU trade negotiations

Talks open with Australia and New Zealand, plus new offer tabled by Mercosur bloc

Cecilia Malmström
Cecilia Malmström

Sarah Collins

June is shaping up to be a dramatic month for EU trade relations.

Talks with Australia and New Zealand kick off, with food and agriculture a top priority; another chapter opens in the decades-long Mercosur saga; and US President Trump's steel tariffs loom as an Obama-era hormone beef row rumbles on.

Antipodean wheeling and dealing will begin with a trip by EU trade chief Cecilia Malmström (below) to Canberra and Wellington in June, after she got the go-ahead from the bloc's trade ministers last week to launch talks. The first formal negotiations take place in Brussels in July.

"We are already close in terms of shared values and our open, global outlook," Ms Malmström said. "Starting these talks between like-minded partners sends a strong signal at a time where many are taking the easy road of protectionism."

Australian prime minister Malcolm Turnbull said last week his first priority would be "to secure better access for Australian food and agriculture products".

Both Australia and New Zealand are keen to see improved access for dairy, beef and sheep meat, while New Zealand has long found it difficult to gain improved access for sparkling wine and fruit and vegetables.

A Commission impact study says the deal would increase EU exports to New Zealand and Australia by about a third in the long term. But it also warns that increased imports from the two countries "may negatively affect the standard of living and traditional lifestyle of small farmers in the EU".

"Adverse impacts on rural employment in the EU are possible - both skilled and unskilled agricultural labour may face adverse consequences," the study says.

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MERCOSUR

And Mercosur talks will resume next month, with food and agriculture back on the agenda.

No progress on beef or other quotas has been made since January, but a reported new offer from the four Mercosur countries last week on cars means the EU "may have to move on agriculture", an EU source said.

"And, if they get too generous with Mercosur, it will have a significant impact on how generous they can be with Australia and New Zealand," the source added.

Agriculture commissioner Phil Hogan moved to reassure farmers that they will not lose out under any of the trade deals in the pipeline.

"I'm amazed at the number of people who worry about trade agreements that haven't even started yet," Mr Hogan told reporters last week, "and even further worry about ones that haven't been completed."

He said the Commission would "reflect the sensitivities we have in whatever sector".

"We'll negotiate the best possible outcome and member states and the European Parliament, ultimately, will have the final say in approving it - or not, as the case may be," he told the Farming Independent in Brussels last week.

US TARIFFS

Both rounds of talks take place against a backdrop of fraying US trade relations.

The EU is expecting a temporary exemption from steel and aluminium tariffs to expire on June 1, which could trigger EU counter-measures against US bourbon, and other iconic products such as denim jeans - a move that EU food and drinks producers fear could rebound on them later on.

And the EU has still not resolved a row with the US in the World Trade Organization over a long-standing quota for US hormone beef.

Brexit is rounding out the EU's trade trauma. A further round of talks focusing on future trade foundered last week, with EU officials accusing the UK of engaging in "fantasy", particularly around customs solutions for the Irish border.

The EU has demanded further progress before a leaders' summit at the end of June.

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