The Council of the European Union (EU) has authorised the signature of the EU-Mercosur Partnership Agreement (EMPA) and of the Interim Trade Agreement (iTA) between the EU and Mercosur, with the Livestock and Meat Commission (LMC) urging Government to provide assurances that domestic markets will not be challenged.
The Council said that the agreements marked “an important milestone” in the EU’s long-standing relationship with Mercosur partners – Argentina, Brazil, Paraguay and Uruguay. Once in force, the Council will aim to establish a framework for political dialogue, cooperation and trade relations within a “modernised and comprehensive” partnership.
The agreements will require the consent of the European Parliament before they can be formally concluded by the Council, and ratification by all EU member states will also be required for the EMPA to enter into force.
The agreement will aim to offer tariff reductions and opens access to new markets for a range of goods and services, with agriculture named as one of the key sectors. The Council said the agreement would include provisions for investment facilitation and the removal of barriers to cross-border trade in services, particularly in digital and financial services.
Commenting on developments within recent days, LMC chief executive Colin Smith said: “There is an air of uncertainty and concern in the wake of provisional clearance being granted for the Mercosur trade agreement with Brazil, Argentina, Uruguay and Paraguay. The potential impacts of this on the domestic market should not be underestimated. If ratified by the European Parliament, this trade deal opens the door for lower-cost imports of beef, produced under differing regulations to what we are accustomed to here.”
“Trade is critical to our industry however we must be able to operate on a level playing field.”
Colin Smith, LMC
Speaking about the feeling on the ground, Smith commented: “Given that we produce more than we consume in Northern Ireland, trade is critical to our industry however we must be able to operate on a level playing field. Farmers here are understandably anxious about the potential impacts that this deal could have on markets and their margins. We have seen the strength of feeling on this evidenced in protests over the past days.
“For consumers, provenance and quality are key factors considered when it comes to purchasing beef and lamb. Any imports and products produced to lower-quality standards than that of domestic regulation must not be allowed to enter the market.
“Locally our farmers uphold world leading standards for food safety, animal welfare and care for the environment. To comply with the terms of the Northern Ireland Beef & Lamb Farm Quality Assurance Scheme (NIBL FQAS) supply chain partners undergo regular inspections and adhere to a robust set of standards to ensure the highest quality of care is upheld throughout the production process. Their dedication to producing high quality beef and lamb must not be undermined, nor should consumer confidence in beef and lamb be diluted by any trade agreement.
“What is needed now is vigorous assurances from Government and policy makers that domestic markets will not be challenged or interrupted by this deal and that all imports will be subject to the same EU standards and checks.”
Deflationary impact will be “difficult to spot”
Thijs Geijer, senior sector economist across Food & Agri at global financial institution ING, stated: “For EU consumers, we argue that any deflationary impact on food prices will be difficult to spot. Firstly, the quotas for products like beef, poultry and sugar will be expanded over multiple years to avoid sudden price drops. Secondly, quotas will be larger, but they still represent only a small portion of total EU consumption. Thirdly, the costs of the agri product make up only a part of the final price that consumers pay. In the case of a steak or a beef burger bought in a restaurant, other factors such as labour costs are an important part of price that a consumer pays.
“There is economic value in the deal, but with a modest 0.1 % contribution to GDP in 2031, it shouldn’t be exaggerated. Then there is symbolic value as it would be a big win for the EU commission and for free trade and rule-based trade deals. And there is economic value as it aligns with EU goals to diversify, both of imports and exports which helps to make the EU economy (and supply chains) more resilient. Higher quotas for EU cheese and milk powder exports to Mercosur are a good example, helping to offset the impact of declining EU dairy exports to China and recent Chinese import tariffs on dairy products.”
