EU-Mercosur trade deal is heading for choppy waters

THE EU-Mercosur trade talks were in choppy waters again this week as the push for a deal appeared to have stalled.

The big stumbling blocks remain access to the lucrative EU beef market for Mercosur, and reciprocal access for European car manufacturers and service providers.

Irish concerns, and those of beef producers across the EU, have centred on the offer of a significant beef quota for Mercosur under any agreement.

EU Trade Commissioner, Cecilia Malmstrom, has offered a beef quota to Mercosur of around 90,000 tonnes but the South Americans are holding out for more.

Phil Hogan has opposed any increase in access to EU markets for South American beef and insisted that improved traceability and quality assurance standards in Mercosur’s meat processing industry is urgently required.

The carrot for European industry in securing a Mercosur trade deal is the potential for massive increases in car exports and in the provision of financial services.

Mercosur consists of Brazil, Paraguay, Uruguay and Argentina and has 260m consumers. Access to the trading bloc’s internal markets is restricted by high tariffs and non-tariff barriers. Despite these barriers EU exports to Mercosur totalled €41.5 billion in 2016, while Mercosur’s exports to the EU were worth €40.6 billion.

Mercosur’s primary exports to Europe consist of agricultural products, while EU exports to the South American grouping included machinery (28pc), transport equipment (17pc) and chemicals and pharmaceutical products (24pc).

Should the current round of trade talks fail it is widely anticipated that they will not resume for over a year as Mercosur’s focus will shift to concluding a trade deal with South Korea. Elections in Brazil might also delay a resumption of negotiations.