Wednesday 17 July 2019

Phil Hogan: 'Farmers must accept that Mercosur strikes a balance and involves compromise'

Compliance: The EU has vowed to protect food standards and environmental factors as part of the deal on imported beef. Stock picture
Compliance: The EU has vowed to protect food standards and environmental factors as part of the deal on imported beef. Stock picture

Phil Hogan

The deal between the EU and the Mercosur countries is the latest in a series of trade agreements to be concluded by this European Commission.

The Mercosur agreement is further evidence of the value the EU sees in facilitating balanced international trade and opening markets with trading partners who respect and meet our standards and rules, particularly in food safety and consumer protection.

Far from being an overnight deal, the EU-Mercosur agreement was 20 years in the making and, over those 20 years, there were plenty of false dawns. As with any trade agreement, the final outcome involved a degree of compromise between the two sides.

There are both opportunities and challenges, and nowhere is this more evident than with Ireland and agriculture.

While it is inevitable individual sectors will look at any trade agreement to see how it affects them, it is also important the overall balance is taken into account.

I welcome, therefore, the Taoiseach's commitment to undertake a detailed economic analysis of the full agreement before the Irish Government delivers its verdict.

I also appreciate there are very genuine concerns about the potential environmental consequences of this agreement and I would invite governments to also undertake an environmental analysis.

Ireland already has a significant trading and investment relationship with the Mercosur countries, each exporting some €480m in goods to the other. On services, Irish companies currently enjoy a trading surplus of more than €1bn with these four South American countries.

Irish chemical and pharmaceutical exports were worth €314m last year. The proposed tariff reduction from 14pc to zero will facilitate significant growth in this sector, which accounts for more than 26,000 Irish jobs. Similar possibilities now exist for the medical devices and the machinery and electrical equipment sectors, which support more than 37,000 jobs in Ireland.

There are also opportunities arising from the removal of tariffs for cheese and other dairy products, as well as for exports of Irish spirits.

It is perfectly understandable that there has been a particular focus on the Irish beef sector, given the EU concessions in this area.

However, there are some important points that need to be made that counter some of the narrative arising from Friday's agreement.

The commission appreciates fully the sensitivity of the beef sector in Europe. We have insisted on a Tariff Rate Quota, which puts a ceiling on the volume that can be imported at preferential tariff rates.

In the case of beef, the quota is fixed at 99,000 tonnes. This is in the context of a total EU market of more than eight million tonnes. So the new quota represents around 1.25pc of total EU beef consumption. Moreover, implementation will start only when the agreement enters into force (not before 2022) and will then be gradually increased over the following five years.

The agreement guarantees that no product will be allowed to enter the EU market unless it complies 100pc with EU standards. We can say, categorically, that beef or other food imported from Brazil, Argentina, Uruguay and Paraguay will not be of a lower standard than those produced in Europe.

By insisting on full compliance with the EU's strict sanitary standards, the commission is improving food safety standards in the Mercosur countries. EU food safety standards are non-­negotiable and will be applied rigorously through the EU's Irish-based Food and Veterinary Office at Grange, Co Meath.

Given the possibilities of a no-deal Brexit, there is significant value in establishing standards for trade between the UK and the Mercosur countries, which will ensure the maintenance of those high standards in a post-Brexit scenario, all of which will protect consumers, not least on the island of Ireland.

In the event of any significant market disturbance arising from the deal, the commission will support Irish and European farmers through the deployment of a support package of up to €1bn. This is the first time ever that such a fund has been made available in the context of a trade agreement and it is available exclusively for the agriculture sector.

As regards sustainability, I welcome and indeed share the concerns expressed about the impact on deforestation. The agreement includes a binding commitment to the Paris Climate Agreement, under which Brazil has pledged to end illegal deforestation in the Brazilian Amazon by 2030 and to restore and reforest 12 million hectares of forests.

Like all trade agreements, Mercosur represents a necessary balance, between our offensive and defensive interests as well as between and within sectors.

In the case of agriculture, the EU is undoubtedly on the defensive on this occasion, but the Mercosur balance must be viewed in the broader context of other recently concluded trade agreements with Japan, Vietnam, Singapore and Mexico, all of which provided significant openings for Irish food exports and, in particular, 105,000 tonnes of exports of European beef. Taking all these agreements into account, the overall picture for the agri-food sector is positive.

I hope that all interested parties will now take the necessary time to consider all the details of the agreement and, where appropriate, if any clarifications and assurances or required, the European Commission stands ready to provide them.

Phil Hogan is the European Commissioner for Agriculture and Rural Development

Irish Independent

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