What's the beef with the EU-Mercosur trade deal?
Jean-Claude Juncker, the outgoing European Commission president, received a letter on June 17 from the government leaders of four EU member states, including taoiseach Leo Varadkar and French president Emmanuel Macron. The quartet had “deep concerns” over the implications for agriculture emerging in trade talks with the Mercosur bloc in South America and how it “could threaten this fragile sector in our countries”.
Charles Michel and Mateusz Morawiecki, the prime ministers of Belgium and Poland, said they were also concerned that a lack of enforceable environmental safeguards in the deal could lead to further deforestation in Brazil.
Twelve days after the letter was written, the EU’s €90bn trade deal with Brazil, Argentina, Paraguay and Uruguay was agreed. Next comes a process known as “legal scrubbing”,which is expected to take two years. But judging by Irish farm leaders’ furious reaction to a provision in the agreement that lets Mercosur sell 99,000 tonnes of beef to the EU annually, which they claim could cost the Irish beef sector €500m to €750m a year, the deal is set to be opposed every step of the way.
Describing the move as “reckless and wrong”, Irish Farmers’ Association president Joe Healy said: “This represents a backroom deal with big business, and kowtows to the likes of Mercedes and BMW in their drive to get cars into South America.”
Beef accounts for 29% of Irish agricultural output, second only to dairy, which accounts for about one-third. Under the deal, 30,000 tonnes of EU cheese would be accepted into the Mercosur bloc.
Yet Michael Creed, the agriculture minister, insists this is “a bad deal for Irish beef farmers”, so he intends to “frustrate”, “dismantle” and “thwart” it.
His pledge struck a discordant note with Heather Humphreys, the business minister, who said the deal “isn’t all bad” for Ireland because it provides gains for exporters of business services, chemicals, machinery and medical devices. Consumer advocates also claim it could reduce shopping bills for customers.
“I’ve heard people say there are opportunities in dairy and drinks but I’ve heard nobody from those sectors singing from the roof tops,”
Creed told The Sunday Times. Rather than trying to reduce the permitted volume of beef imports to the EU, he intends “nailing down” legal obligations on climate, sanitary and safety standards, which will make it more difficult for South American exporters to sell into the EU.
Dara Calleary, Fianna Fail’s deputy leader, asked Regina Doherty, the social protection minister, in the Dail on Thursday whether she was on “Team Creed, the leader of which is going to take the agreement apart, or Team Humphreys, the leader of which thinks the agreement is good and that it will present many opportunities”.
“I am on Team Ireland,” Doherty replied.
Ireland has no veto on the deal, which must pass by an EU majority vote, and member states’ parliaments will get a say only if it is categorised as a “mixed deal” with political and trade implications.
Which of the other 27 states are likely to tog out with Team Ireland? Macron is seen as a powerful ally, as France is the world’s sixth-largest agricultural producer and accounts for about one-fifth of all agricultural land within the EU. Michel could also prove pivotal as he has been nominated to replace Donald Tusk as president of the European Council.
Ireland’s EU commissioner Phil Hogan, who currently holds the agriculture portfolio, has been criticised for defending the deal as “fair and balanced”. If he secures the trade portfolio in the new commission, he will be a key figure in the process.
“I would say there isn’t a week goes by that I haven’t been in contact with the commissioner on this matter,” said Creed. “He has been more than helpful in trying to secure the best deal.”
Micheál Martin, the Fianna Fail leader, has questioned what precise discussions Creed and Hogan had during the negotiations and why the commissioner did not make more of an issue of the rampant deforestation in Brazil, under its president Jair Bolsonaro, whom he called the “Trump of the tropics”.
On RTE Radio last Monday, presenter Seán O’Rourke asked the Fine Gael MEP Mairead McGuinness whether she was available to become the next Irish commissioner. “I haven’t got the call, Seán, but I’ll let you know if I do,” she replied. Government sources say there will be no vacancy, however, as Hogan is poised to be re nominated in the expectation that he will get a prime portfolio.
Jackie Cahill, a Fianna Fail TD for Tipperary and former president of the Irish Creamery Milk Suppliers Association, claims the government has been “taken aback” by the strength of farmers’ reaction to the Mercosur deal.
“They are talking about bringing food halfway across the world to displace European product, and that is driving farmers bananas. The hypocrisy of the commission to allow a deal like this to go through when adapting to climate change is all the talk in Europe,” he said.
“Beef production at the moment in this country is a loss-making exercise, and to be talking about bringing extra beef into Europe makes no sense. Once something is decided in Brussels, it might not happen in six or 12 months, but it always happens in the end. This decision is done and I’d say there’s a bit of ‘we looked after you on Brexit, you can swallow this now and stay quiet’.
”For Cahill, being able to sell 30,000 tonnes of EU cheese tariff-free into the Mercosur countries would not offset the damage to the beef sector. “We can’t compete with their cost of production. There may be question marks over Brazilian beef, but the harsh reality is Argentinian [beef] is of good quality and can compete on taste and quality with ours. We won’t be able to compete economically.
”Yet not everyone is displeased. On the European side, exporters of cars and their components, machines, pharmaceuticals, medication, clothes, chocolate, wine, spirits, cheese and shoes will profit from it. Ibec, the business representative body, said companies “across the Irish economy [will] gain new market access opportunities to a region of almost 300m consumers”.
Danny McCoy,Ibec’s chief executive, said Irish exporters face increasing uncertainty on global markets. “In Ireland, 648,000 jobs depend on exports to countries outside the EU, and expanding trade deals such as this will ultimately bring many positives.”
McGuinness has predicted the Mercosur deal will be “a hot potato” for the European parliament. It is threatening to be just as hot for the Dail. On Wednesday, it will debate a Sinn Fein motion calling on the government to ensure Mercosur is rejected. In the last sitting week before the summer recess, and with the Brexit clock ticking towards its October 31 deadline, there is likely to be a rush for the green jerseys in Leinster House.
Justine McCarthy and Stephen O’Brien.