While US president Donald Trump has dominated trade headlines in recent times, the EU-Mercosur trade deal is the one that matters most to Irish farmers.
Mercosur is the name given to a trading bloc of South American countries that includes Brazil, Argentina, Uruguay and Paraguay.
The deal was signed off in December last year and has since been going through the administrative process in Brussels, largely under the radar.
However, that is about to change and the ratification process will begin in earnest in the coming weeks when the deal will come before the European Council of Ministers.
If it gives the deal the go-ahead, it will move into the European Parliament, where a simple majority is required for approval. The parliamentary process will take several months and if given the all-clear, it is back to the Council of Ministers for final sign-off.
The view in the European Commission is that if everything goes to plan, the deal could be operating provisionally by the end of 2026 or the start of 2027.
Obviously, there is still quite a way to go, but now there is now a huge political will - as well as economic - for the negotiated deal to become operational.
Since the start of the second Trump presidency, it is fair to say that the rules-based order of global trade has been upended. The EU-Mercosur deal would be a demonstration that two significant global trading blocks can function under what might now be described as the old rules.
Farmer concerns
The Irish Creamery Milk Suppliers' Association (ICMSA) held what it described as an unsatisfactory meeting with European Commission officials in relation to the Mercosur deal this week.
The association's point is that the concerns that they have raised in relation to traceability, growth promoters and deforestation haven’t been properly addressed or answered.
It has also questioned the monitoring process for Mercosur imports and also has concerns about how the promised €1bn compensation package will be funded.
Irish beef and poultry farmers are the most exposed in the Mercosur trade deal. The 99,000-tonne quota with a preferential 7.5% tariff rate is the most generous ever granted by the EU in a trade negotiation and twice as much as the previous highest concession to Canada in the CETA negotiation.
The EU would point out that this was a major concern when that deal was announced in 2016, but that there hasn’t been a flood of Canadian beef imports to the EU, while the EU has increased its beef exports to Canada significantly.
Winners and losers in the deal
Advocates for the Mercosur deal would also point out that when the negotiation began at the end of the last century, the EU was the holy grail of markets for Mercosur exporters.
However, since then, China has become their main export market for beef followed by the US and, in the case of Uruguay, the Middle East is a more important market than the European Union.
Of course, from the perspective of the wider Irish economy, technology and pharma exporters would be major winners in the Mercosur deal. If tariffs were removed from these South American countries, there is considerable potential to increase Irish exports.
Similarly, it is thought that there are export opportunities for Irish dairy, as current tariffs - which are up to 55% - effectively block Irish exports to the region.
Taking one for the team
However, the problem with these opportunities is that they come with a 99,000t beef quota for South American exporters to the EU market.
While China and the US may be lucrative markets for South American countries at present, the reality is that Europe is the highest-value steak market in the world.
There is nothing to prevent the entire quota being filled with steak meat, with the other lower-value parts of the carcase being shipped elsewhere by South American exporters.
In that way, the EU market would compliment existing markets for the cheaper value cuts.
Overall, there are clearly benefits in the Mercosur deal for the wider Irish economy, but the reality is that Irish beef producers will be exposed even if it doesn’t become apparent immediately due to strong global beef markets.
Read more
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IFA to lobby TDs and senators in nationwide campaign
While US president Donald Trump has dominated trade headlines in recent times, the EU-Mercosur trade deal is the one that matters most to Irish farmers.
Mercosur is the name given to a trading bloc of South American countries that includes Brazil, Argentina, Uruguay and Paraguay.
The deal was signed off in December last year and has since been going through the administrative process in Brussels, largely under the radar.
However, that is about to change and the ratification process will begin in earnest in the coming weeks when the deal will come before the European Council of Ministers.
If it gives the deal the go-ahead, it will move into the European Parliament, where a simple majority is required for approval. The parliamentary process will take several months and if given the all-clear, it is back to the Council of Ministers for final sign-off.
The view in the European Commission is that if everything goes to plan, the deal could be operating provisionally by the end of 2026 or the start of 2027.
Obviously, there is still quite a way to go, but now there is now a huge political will - as well as economic - for the negotiated deal to become operational.
Since the start of the second Trump presidency, it is fair to say that the rules-based order of global trade has been upended. The EU-Mercosur deal would be a demonstration that two significant global trading blocks can function under what might now be described as the old rules.
Farmer concerns
The Irish Creamery Milk Suppliers' Association (ICMSA) held what it described as an unsatisfactory meeting with European Commission officials in relation to the Mercosur deal this week.
The association's point is that the concerns that they have raised in relation to traceability, growth promoters and deforestation haven’t been properly addressed or answered.
It has also questioned the monitoring process for Mercosur imports and also has concerns about how the promised €1bn compensation package will be funded.
Irish beef and poultry farmers are the most exposed in the Mercosur trade deal. The 99,000-tonne quota with a preferential 7.5% tariff rate is the most generous ever granted by the EU in a trade negotiation and twice as much as the previous highest concession to Canada in the CETA negotiation.
The EU would point out that this was a major concern when that deal was announced in 2016, but that there hasn’t been a flood of Canadian beef imports to the EU, while the EU has increased its beef exports to Canada significantly.
Winners and losers in the deal
Advocates for the Mercosur deal would also point out that when the negotiation began at the end of the last century, the EU was the holy grail of markets for Mercosur exporters.
However, since then, China has become their main export market for beef followed by the US and, in the case of Uruguay, the Middle East is a more important market than the European Union.
Of course, from the perspective of the wider Irish economy, technology and pharma exporters would be major winners in the Mercosur deal. If tariffs were removed from these South American countries, there is considerable potential to increase Irish exports.
Similarly, it is thought that there are export opportunities for Irish dairy, as current tariffs - which are up to 55% - effectively block Irish exports to the region.
Taking one for the team
However, the problem with these opportunities is that they come with a 99,000t beef quota for South American exporters to the EU market.
While China and the US may be lucrative markets for South American countries at present, the reality is that Europe is the highest-value steak market in the world.
There is nothing to prevent the entire quota being filled with steak meat, with the other lower-value parts of the carcase being shipped elsewhere by South American exporters.
In that way, the EU market would compliment existing markets for the cheaper value cuts.
Overall, there are clearly benefits in the Mercosur deal for the wider Irish economy, but the reality is that Irish beef producers will be exposed even if it doesn’t become apparent immediately due to strong global beef markets.
Read more
Mercosur: ‘vague political statements’ no longer good enough – ICSA
Fine Gael MEPs vote against amendment to abandon Mercosur deal
IFA to lobby TDs and senators in nationwide campaign
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