Q&A: Mercosur and Ireland - What impact will agreement have on our economy?

 

The EU is already Mercosur’s largest trading partner and under the deal, if ratified by all member states, there will be more open markets between the two blocs. Photo: AFP/Getty Images
The EU is already Mercosur’s largest trading partner and under the deal, if ratified by all member states, there will be more open markets between the two blocs. Photo: AFP/Getty Images
Margaret Donnelly

Margaret Donnelly

What's the Mercosur deal?

After 20 years of negotiations, the EU has struck an agreement with the South American trading bloc known as Mercosur.

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Mercosur countries consist of Brazil, Argentina, Paraguay and Uruguay. This deal has seen around 40 rounds of talks as the negotiations shuddered along. A provisional deal was agreed on Friday.

The EU is already Mercosur's largest trading partner and under the deal, if ratified by all member states, there will be more open markets between the two blocs.

Who will benefit?

EU Commission President Jean-Claude Juncker called it "a historical moment. In the midst of international trade tensions, we are sending a strong signal that we stand for rules-based trade".

He noted it was "the largest trade agreement the EU has ever concluded.

"Thanks to the hard and patient work of our negotiators, this is matched with positive outcomes for the environment and consumers."

What is the impact?

Some say the deal will see an open, rules-based and fair-trade world order.

Under this agreement, the EU will benefit from greater access to the Mercosur bloc for products such as cars and parts, machinery, chemicals and pharmaceuticals.

As part of the deal, the Mercosur countries are being allowed to export greater amounts of beef, poultry, sugar and ethanol into the EU, through what are known as tariff rate quotas.

This means the Mercosur countries' export amounts of these products will be capped and will carry a reduced tariff.

The EU says the quotas will safeguard the interests of EU farmers.

Is it a good deal for Ireland?

EU Agriculture Commissioner Phil Hogan said Europe had to make "some significant concessions to achieve a balanced agreement".

The extra 99,000 tonnes of beef the Mercosur bloc can send to the EU will be at the 7.5pc tariff rate and will account for around 1.25pc of total EU beef consumption and be implemented over a five-year period.

However, farming organisations have slated the deal, saying it will ruin the beef industry here.

Why is the Irish beef industry affected?

Last year, Europe imported almost 270,000 tonnes of beef and veal from Mercosur. Now it will be able to export an extra 99,000 tonnes at a lower-rate tariff of 7.5pc.

Ireland exports 90pc (512,000 tonnes) of its beef and 95pc of that goes to EU markets, including the UK. Approximately 50pc of Irish beef is exported to the UK and the EU is its second biggest market.

Ireland's beef exports are worth €2.32bn and now face competition from cheaper South American products.

IFA president Joe Healy said EU negotiators have colluded in a deal that has sold out Irish and European farmers.

Farmers in Europe say they produce beef to a higher standard than South America, including welfare and environmental standards, driving up the cost of production for European farmers.

Irish Independent