Friday 19 July 2019

Editorial: 'Beef deal a worry but focus on Brexit'

The Mercosur deal, to be implemented in eight years, is not the biggest or most immediate threat to the beef industry, which remains the live prospect of a no-deal or hard Brexit. Focus should remain firmly on this for the moment. Photo: AFP/Getty Images
The Mercosur deal, to be implemented in eight years, is not the biggest or most immediate threat to the beef industry, which remains the live prospect of a no-deal or hard Brexit. Focus should remain firmly on this for the moment. Photo: AFP/Getty Images
Editorial

Editorial

The political agreement reached between the European Union and the Mercosur bloc of countries in South America has been roundly criticised by farm lobby groups as well as several politicians here, including some Government ministers. The outcry is understandable.

The Government is to carry out an assessment of the proposed deal, which will look at the overall impact on Ireland's economy and employment. Pending the outcome of that assessment, final judgment should be reserved. While undoubtedly the proposed deal will hit beef farmers here in particular, the wider effect will not be as severe and, indeed, there may be opportunities for other sectors of the economy here. That said, what is initially proposed will come as a blow to the agriculture sector, and specifically the beef industry, which is already experiencing many difficulties.

However, the Mercosur deal, to be implemented in eight years, is not the biggest or most immediate threat to the beef industry, which remains the live prospect of a no-deal or hard Brexit. Focus should remain firmly on this for the moment.

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The proposed Mercosur deal, described as "ambitious, balanced and comprehensive" by the European Union, proposes an extra allocation of 99,000 tonnes of beef quota at the preferential tariff of 7.5pc for the EU as a whole. This represents a third of Irish beef exports to the UK alone. The extra allocation amounts to only 1.2pc of total European demand. Any quota increase means more unwelcome competition for Irish exports and is bad news, but as the economist Colm McCarthy has argued, there is a need for perspective at the moment. At this stage, there is scope for modification. The Mercosur deal is not yet set in stone.

It should be borne in mind that the EU-Mercosur agreement will remove the majority of tariffs on EU exports to Mercosur - Argentina, Brazil, Paraguay and Uruguay - making EU companies more competitive by saving them €4bn worth of duties a year. The proposed deal will help boost exports of EU products that have so far been facing high and sometimes prohibitive tariffs. In this regard, Ireland's industrial sectors may stand to benefit considerably, notably chemicals, which currently have tariffs of up to 18pc, and pharmaceuticals (tariffs of up to 14pc).

While delivering significant economic benefits, the agreement also promotes high standards. Furthermore, the EU and Mercosur commit to effectively implement the Paris Climate Agreement. A dedicated sustainable development chapter will cover issues such as sustainable management and conservation of forests, respect for labour rights and promotion of responsible business conduct. It also offers civil society organisations an active role to overview the implementation of the agreement, including any human rights, social or environmental concerns.

That said, there remain significant concerns for Ireland in relation to the agriculture elements of the proposed deal. The announcement could not come at a worse time for the beef sector. However, it behoves that industry in particular to engage with the Government's assessment of the impact of the plan, and also for the Government to take on board the findings of that assessment in relation to the beef sector.

Fortunately, there is time for that assessment to fully factor in the impact of Brexit before the proposed EU-Mercosur deal is finally agreed.

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