Latest chapter in turbulent decade for trade

In a couple of months’ time, it will be nine years since the UK made the momentous decision to leave the EU.

Donald Trump’s first campaign for the US presidency was gaining momentum at that time, even if he wasn’t expected to win it in the spring of 2016.

Since then, global trade has undergone the greatest period of turbulence in peacetime, though the conflicts in Ukraine and the Middle East suggests that the term “peacetime” cannot be applied globally.

Turbulence is the term that best sums up Irish agriculture over this period. It has been a decade of historic expansion in Irish dairy, but performance elsewhere has been patchy at best.

It is only in recent weeks that beef producers and suckler farmers are getting prices that make the business close to commercially viable. Sheep prices have been strong for a longer period, but not strong enough to prevent a serious loss of production in 2024.

The ongoing tariff dispute with the US may have paused for 90 days this week, but, since the start of the second Trump presidency in January, the relationship between the EU and the US has deteriorated.

For Irish farmers, there are two consequences of particular concern arising from this changed relationship.

CAP impact

The first is how agriculture will be supported in the next CAP, which is currently in gestation.

The previous negotiation was dominated by the policy priority of reducing emissions from farming with the importance of production almost sidelined in the process.

This time, there is a greater awareness of the importance of food security, a lesson learned from the shock to the system received on energy supply following the Russian invasion of Ukraine in 2022.

However, even if there is a better appreciation of production, there is a growing concern about finance. The combination of Russia invading Ukraine combined with the US no longer being prepared to support NATO to previous levels means that European countries need to find more money for guns and there is every chance that this will be found from the budget that funded meat, dairy and grain production at an EU level.

Trade deals

There is also the question of the European Union’s place in global trade following the repositioning of the US.

European Commission president Ursula von der Leyen in recent days said that part of the EU response to US tariffs would be that “we will focus like a laser beam on the 83% of global trade that is beyond the United States”.

Europe has been active in pursuing trade deals across the world, with several concluded in the past decade.

However, there is one with another major trading bloc that remains outstanding. Even though it has been negotiated, it has not yet been approved.

This is the Mercosur deal, which was finalised for a second time at the end of last year and was generating huge opposition in Europe, especially from countries that have a significant beef farming population.

Recently, it has been reported that Austria is softening its opposition and France, which has been leading the opposition, is also understood to be looking to be more flexible.

Irish export interests are conflicted, in that, as the recent US tariff debate has highlighted, pharma is our biggest export concern.

The bottom line is that the EU will push hard to ratify Mercosur in 2025, irrespective of the US tariff position.

It would be an opportunity to demonstrate globally that the EU has other trade options, even if less lucrative, at least in the short term.

Given that the US is the largest importer of beef in the world after China, Europe is the next most lucrative market for South American beef exporters.

In practice, this means that if their trade with the US is disrupted because of tariffs or any other reason, Europe comes into play and it has an extra 99,000t quota available with a preferential tariff, then Irish beef producers face a level of competition not previously experienced in the EU marketplace.

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