Farm Ireland

Thursday 18 January 2018

Analysis: It's no surprise that Irish agri lobby has stayed very quiet on EU-Canada deal

The deal, which has been seven years in the making, nearly came unstuck at the last minute. PHOTO / STR / China OUTSTR/AFP/Getty Images
The deal, which has been seven years in the making, nearly came unstuck at the last minute. PHOTO / STR / China OUTSTR/AFP/Getty Images
Darragh McCullough

Darragh McCullough

It was three years ago when I last wrote about the Comprehensive Economic Trade Agreement (CETA) between Canada and the EU.

Back then we were told the €26bn deal would be a scene-setter for an even bigger one between the US and the EU. However, here we are years later with the ink still not dry on a CETA, and the EU keen to show all those free-traders out there that it's just as easy to deal with as anyone else...which of course just isn't true.

The deal, which has been seven years in the making, nearly came unstuck at the last minute because of a Belgian region called Wallonia sticking to its guns over concerns about whether these deals will expose governments to legal suits from big corporations that don't get their way on state contracts.

While these concerns were legitimate, the realpolitik of the EU becoming increasingly anxious about being left behind in the race to carve up the planet's consumers in a massive web of bilateral deals forced it through without so much as a squeak from the usual suspects lobbying on behalf of Irish agriculture.

While Meat Industry Ireland (MII) was convulsed in "extreme" disappointment three years ago, this time they urged the pesky Wallonians to give way so that the deal could be signed.

Meanwhile, the Irish Dairy Industry Association openly welcomed the prospect of a deal last week, while the normally hard-to-please IFA were reported to be "happy" with the agreement.

Only the ICSA expressed real reservations, centring on the "bullying" of Wallonia. "Given the uncertainty around Brexit, the last thing we need is more beef being imported," said ICSA president Patrick Kent.

However, it appears that those at the heart of the negotiation from an Irish point of view are more concerned about staying ahead of the US and other big meat exporters in the negotiations that are on-going with Japan through the TTP talks.

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Japan is possibly the only place on the planet where food production is even more expensive than it is in the EU.

For this reason it is already an important market for Irish pigmeat and some lower-value beef cuts, and the belief among beef exporters is that Ireland would be at a severe disadvantage in this potentially lucrative market if Europe doesn't get its deal done ahead of the others.

If CETA had continued to drag on, it was quite conceivable that big economies like Japan would have pushed EU trade efforts to one side on the basis that they were more hassle than they were worth.

So rather than wasting time on the finer points of CETA, the folks in MII, IFA and co are focusing their lobbying efforts on the dangers poised by the TTIP deal with the US and that old chestnut, Mercosur.


In reality, it is the latter that will always be the most dangerous for Irish farmers. Canada, even though it has secured access to the EU for 45,000t of beef and 75,000t of pork, is not able to produce this product at hugely discounted rates compared to EU producers.

The argument was that if the Canadians concentrated on filling that 45,000t of EU beef exports with high price cuts, it would account for nearly 10pc of the entire EU market, which can account for 40pc of carcase value.

But the big spike in North American beef prices over the last couple of years means that even this option isn't terribly attractive to the Canadians, which may expain why they haven't filled their existing EU beef export quota in recent years anyway.

The fears about cheap hormone beef are probably over-blown because the product still won't be a runner for EU consumers.

In fact, as Irish meat exporters look frantically for alternatives to the potential chaos of a post-Brexit UK market, Canada might actually present some very palatable meat exporting opportunities.

In the same way that Irish beef is hoping to connect with the Irish diaspora on the US's Eastern seaboard, similar opportunities exist within Canada, now that the 26.5pc import tariff is removed on EU meat. Consider for a moment that Canada already imports €3bn of agrifood from Ireland - so we're not an unknown.

Dairy could be even sweeter. The sector is so highly protected in Canada that one industry source likened it to the "North Korea of dairying".

As Irish dairy farmers have proved over the last year, they are among the lowest-cost producers in the EU, and can certainly undercut Canadian prices now that tariffs as high as 50pc are removed from Irish exports to that country.

CETA is not a free-for-all. Effectively, the Canadians have doubled the existing cheese quota to 32,000t.

However, the Irish have won some important concessions, including priority access to 30pc of the new quota, and the inclusion of cheddar in the high quality cheese bracket that the quota is dominated by.

Again, setting this new market access against the backdrop of a turbulent British market that still accounts for a whopping 60pc of all Irish cheese exports - the equivalent of 88,000t - it is clear why CETA could be extremely valuable to Irish farmers over the coming years.

Despite all the talk about infant milk formula and protein isolates, cheese is still the dairy industry's, to mix my metaphors, bread and butter.

Speaking of butter, Kerrygold is sure to fly it in Canada. It's possibly the Irish dairy industry's most iconic brand in the US already, and it doesn't require a lot of imagination to see it appealing to Canadian consumers too.

At the end of the day, if we expect to export a full 95pc of what we produce, we can't really afford to be anti-international trade, can we?

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