An EU-Mer­co­sur trade agree­ment is far from a done deal fol­low­ing last week’s in­ter­ven­tion by France, report and Sarah Collins

Anne Fitzger­ald

Irish Independent - Farming - - NEWS -

THE like­li­hood of a trade deal be­tween the EU and Mer­co­sur na­tions be­ing struck by the cur­rent De­cem­ber dead­line has re­ceded fol­low­ing a ma­jor in­ter­ven­tion by French pres­i­dent Em­manuel Macron.

Last week, Macron (in­set) said France was not in a hurry to reach a free-trade deal with the Mer­co­sur bloc: “I am not in favour of hur­ry­ing to con­clude be­fore the end-of-the-year trade ne­go­ti­a­tions for which the man­date was given in 1999.”

Macron is to ask EU lead­ers at a sum­mit this week to put the brakes on Mer­co­sur, but the Euro­pean Com­mis­sion is in­tent on clos­ing a deal by year’s end, or at least be­fore the end of its cur­rent term in 2019.

France is one of 11 mem­ber states — in­clud­ing Ire­land, Aus­tria, Hun­gary, Poland and Ro­ma­nia — strongly op­posed to the pro­posed deal as it stands.

The big back­ers of the deal are Spain and Por­tu­gal, which have cul­tural ties to South Amer­ica, and north­ern Euro­pean coun­tries like Ger­many, which wants im­proved mar­ket ac­cess for cars.

Many coun­tries also see op­por­tu­ni­ties to open up South Amer­i­can mar­kets to Europe’s re­tail gi­ants and get ac­cess to lu­cra­tive pub­lic pro­cure­ment con­tracts.

There is a big push in the EU’s Trade Direc­torate Gen­eral to reach at least the bones of agree­ment by year end.

Not many peo­ple be­lieve that an agree­ment will be reached, at least within the cur­rent time­frame, even though Ar­gentina wants to an­nounce a deal at a World Trade Or­ga­ni­za­tion con­fer­ence it is host­ing on De­cem­ber 13.

The one cer­tainty is that no deal will be struck un­less it in­cludes beef.

The key stick­ing point con­cerns “sen­si­tive” agri­cul­tural prod­ucts beef and ethanol. In re­la­tion to beef, there are ad­di­tional un­re­solved food safety, an­i­mal wel­fare and en­vi­ron­men­tal con­cerns, par­tic­u­larly in re­la­tion to Brazil.

At the heart of the di­vi­sions within the EU is the cur­rent of­fer to the four Mer­co­sur na­tions of an ad­di­tional 70,000-tonne pref­er­en­tial mar­ket ac­cess quota, in­volv­ing a tar­iff rate of 7.5pc.

This in­cludes 35,000t of fresh beef, made up of high-value Hil­ton beef and young graz­ing beef, plus 35,000t of frozen beef. A six-year tran­si­tional pe­riod is pro­posed.

This 70,000t is the first for­mal of­fer to Mer­co­sur by the EU since ne­go­ti­a­tions restarted af­ter a decade-long freeze.

A 2016 pro­posal of 78,000t was with­drawn be­fore be­ing for­mally of­fered due huge out­cry across sev­eral mem­ber states.

How­ever, while op­po­si­tion to the deal in Europe cen­tres on the quota of­fered be­ing too big, Brazil’s chief ne­go­tia­tor Ron­aldo Costa Filho has also crit­i­cised it, for be­ing too small.

Ac­cord­ing to Ar­gentina’s pow­er­ful farm lobby, the beef quota as pro­posed is equiv­a­lent to just two ham­burg­ers a year per EU res­i­dent.

But, given that each car­cass yields only about 12pc in prime cuts, the EU of­fer could en­tail to­tal slaugh­ter­ings of up to 600,000t, which is greater than Ire­land’s en­tire an­nual beef ex­ports of 535,000t.

Joe Burke, beef and live­stock sec­tor man­ager with Bord Bia, said they would be “hugely con­cerned” about the im­pact of the pro­posed Mer­co­sur of­fer. “In a Euro­pean mar­ket of 7mt beef, 70,000 might not seem that sig­nif­i­cant but it could have a ma­jor im­pact in terms of com­pe­ti­tion for our high-qual­ity cuts go­ing to Con­ti­nen­tal Europe,” he said. “It’s an ad­di­tional neg­a­tive force within the EU, in light of Brexit and the grow­ing num­bers of cat­tle avail­able for pro­cess­ing in Ire­land.”

A report last year by the EU Com­mis­sion’s own Joint Re­search Cen­tre showed that up­com­ing trade agree­ments, led by Mer­co­sur, could slash Euro­pean beef prices by up to 16pc. The cu­mu­la­tive cost across the Euro­pean beef sec­tor could rise to €5bn an­nu­ally, by 2025.

Be­cause of Ire­land’s heavy de­pen­dence on ex­ports, the IFA fears that the im­pact would be pro­por­tion­ally higher, po­ten­tially cost­ing the sec­tor €500€750m.

Cat­tle rep­re­sent 8.1pc of to­tal EU agri­cul­tural out­put and 18.8pc of its an­i­mal out­put (ex­clud­ing milk). In 2016, the EU im­ported a to­tal of 333,957 t beef car­case weight equiv­a­lent, three-quar­ters of this (246,743t) from Mer­co­sur coun­tries.

‘Hil­ton’ quota

The ma­jor­ity of these im­ports are cov­ered by what are called Tar­iff Rate Quo­tas, agreed un­der var­i­ous rounds of GATT. These com­prise a GATT frozen beef quota, A+B pro­cess­ing quota, Hil­ton quota and High Qual­ity Beef (HQB).

This is a com­plex area, and the amount of tar­iff paid varies be­tween the var­i­ous quo­tas and the form in which the meat is sold, ie whether fresh or frozen.

For ex­am­ple, the High Qual­ity Beef Quota (or HBQ), which has a zero-tar­iff rate, ap­plies to high-qual­ity fresh, chilled and frozen grain-fed beef that meets

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