Farm Ireland

Wednesday 18 July 2018

Viewpoint: Mercosur deal poses a serious longterm threat to our beef sector

Argentina's President Cristina Fernandez at the Mercosur summit (AP)
Argentina's President Cristina Fernandez at the Mercosur summit (AP)

Louise Hogan

It appears that the long-running Mercosur negotiations have shifted up a gear.

So too have the very real concerns over the possibility of cheaper South American beef sitting on shop shelves throughout the European Union.

This would have a serious impact and lead to automatic displacement of European and Irish beef on shelves. With more than 90pc of Irish beef exported to Europe, Ireland will be hit first and hardest, as we are often second choice after domestic product in vital markets like the UK, France and Germany.

The figures involved have really set off the alarm bells. It emerged in recent days that the draft EU offer to the South American countries is based on a tariff rate quota of 78,000t of beef, including 39,000t of high-value cuts at a hugely discounted tariff rate of 7.5pc.

It would mean a significant amount of beef coming onto the European markets at a time when the markets are, at best, shaky.

It is not the first time that a deal with the Mercosur countries - including agri-powerhouse Brazil, Argentina, Venezuela, Paraguay and Uruguay - has been on the table.

Around eight years ago this type of deal was also up for discussion, but a number of factors came into play, with Brazil moving to concentrate on other markets such as Asia and Russia.

However, a 78,000t deal with low tariffs may be incentive enough for the South American exporters to put more efforts into negotiating EU regulatory hurdles this time around.

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So after years of on-off discussions, why the big push for it now?

For a start, Argentina has made it clear it's open for business after over a decade of protectionist policies. Could it also be that the EU is trying to send out a subtle signal that it is serious about closing the TTIP deal with the US?

But European markets have changed since the last time that Mercosur talks were properly on the table, with beef consumption down by around 500,000t.

It is clear the European market is less capable of absorbing additional imports now than it would have been before.

Last year around 220,000t of beef came in from the four Mercosur countries under existing quota arrangements, with Brazil leading the way.

This deal is questionable as there is little to gain on the European agri-food side.

It is very much about the bigger picture and the sale of industrial services and electronic goods to South America.

Overall it may be under the remit of the Trade Commissioner, but now is the time for Agriculture Commissioner Phil Hogan to ensure the beef industry is not sacrificed.

The Government must also not let the political battle on home turf interfere with efforts to protect our multi-billion euro beef sector.

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