Beef offer to Mercosur likely but not certain

It is a situation similar to May 2016 when the Commission then wanted to put a 78,000t offer on the table only for national resistance preventing it being formalised.

Floating the idea

On Wednesday, the Commission floated the idea of a 70,000t offer but the resistance from beef-producing countries is fierce with intense political lobbying being carried out in the margins of the heads of Government Council in Estonia.

The oppostion

Ireland and France have been foremost in this and were part of an 11-country group that wrote to DG Trade and DG agri on Wednesday opposing any offer. Cyprus, Greece and Latvia have indicated support for this position.

For the deal

On the other hand, a group of eight including Spain, Germany, Italy, Denmark, Portugal, the Czech Republic, Sweden and the UK have come out and supported a deal before the end of the year.

Outrage

As might be expected, the farm organisations are outraged as indeed is the processing industry.

In Ireland, the IFA has mobilised a protest at the EU offices in Dublin against what they describe as a sellout of the beef sector. Meat Industry Ireland, the trade association that represents the beef factories, has also issued a strongly worded statement opposing any offer at this time.

Farm organisations and the beef processing industry are surprised by the size of the beef offer being contemplated. An offer was successfully rebuffed in May 2016, and farmers and the wider industry point out two very significant events since then.

Firstly there was the decision by the UK in June last year to leave the EU, which has the potential to seriously disrupt the trade balance in the EU if the UK goes it alone with trade deals when they leave.

Ireland would have no hope of selling into the UK under WTO tariffs, which would mean up to 250,000t of Irish beef would be looking for a market among the EU27.

That would be more than enough beef to cause serious market disruption without an additional 70,000t of South American beef to contend with as well.

Cumulative impact assessment

Also, after the decision not to go forward with the offer last May, the Commission undertook a cumulative impact assessment on the implications of trade deals.

This exercise demonstrated clearly that EU beef producers would be significant losers in the event of a Mercosur trade deal that allowed low tariff rate beef on to the EU market.

The deliberations on Mercosur dominated the discussion in Brussels this week, completely overshadowing the latest round of Brexit negotiations.

Indeed it was a surprise to many Brussels insiders that the UK took a position on the beef offer to Mercosur. It had been thought that with their imminent departure from the EU, the UK would have avoided taking a position.

With the EU negotiating team travelling to Brazil for the start of the next round of negotiations beginning on Monday, it remains uncertain if the Commission will get its wish to make this beef offer. It had appeared a done deal on Wednesday evening but the fierce resistance from countries opposed and farmer outrage has so far prevented it being confirmed. Irish farmers and their EU counterparts will be anxiously watching what the negotiators say when the talks start in Brazil on Monday.

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