What the Mercosur deal means for Irish farmers

The trade deal between the European Union and Argentina, Brazil, Paraguay, and Uruguay, which collectively make up Mercosur, was originally agreed in June 2019.

The announcement by European Commission president Ursula von der Leyen at the Mercosur summit last week refers to supplementary environmental and sustainability measures, but all other aspects of the deal agreed in 2019 remain.

Interestingly, the EU announcement of the deal refers to the agreement being “composed of a political and co-operation pillar, and a trade pillar.” This is important because if trade is separated from the wider agreement then beef and poultry access to the EU can be approved by the EU institutions alone without member state approval, removing the potential for veto.

The standout detail for Irish farmers is that the EU will grant the Mercosur countries access to the EU market for an additional 99,000t of carcase weight equivalent (CWE) beef at a preferential 7.5% tariff, 25,000t of pigmeat with a tariff of €83/t and 180,000t of poultry meat at 0% tariff.

The impact on dairy is neutral with a reciprocal tariff arrangement on quotas for cheese, SMP and infant formula.

Assessments

Both the EU and Irish Government have carried out impact assessments on the Mercosur deal. The EU study which was released at the beginning of this year, covers a basket of trade deals concluded over recent years or are in negotiation, including deals made by the UK post-Brexit. It shows that beef imports would increase by either 81,000t or 91,000t, depending on the ambition of the deals concluded, the vast majority from Mercosur countries.

Poultry meat imports are predicted to increase by either 209,000t for conservative deals or up to 274,000t in an ambitious trade deal.

In July 2021, the Irish Government released a 144-page impact assessment on the impact of the Mercosur deal on the Irish economy. The report forecast that the biggest impact would be felt in the sale of high-value steak cuts with value falling between 3.3% and 7.2%, with EU beef imports from Mercosur countries increasing by 53,000t.

Using 2021 beef price values, the overall cost to Irish beef producers was between €44m and €55m.

There was also good news for the wider Irish economy in the impact assessment.

Overall Irish exports to Mercosur countries were predicted to increase by €1.246bn by 2035 with electrical equipment, machinery, computer, electronics optical and chemicals, which includes pharma, the major winners.

These categories which underpin Irish Government corporation tax receipts are also major players in other EU countries as well.

The other major winner particularly for Germany, Spain, France and Italy is the auto sector where tariffs would be abolished on the export of cars and car parts from the EU to Mercosur markets.

Dairy

Butter

Pork

Cars

Car parts

Machinery

Chemicals

Beef

Poultry

Pork