ICMSA has lashed out at media reports of a compensation package for French farmers in return for France dropping its opposition to the Mercosur trade deal. MEP Ciaran Mullooly told the Irish Farmers Journal that he understands it is being considered in Commission circles and it was also debated in the margins of a Renew agri group meeting this week.
The Mercosur trade deal was agreed in June 2019 between the EU and Brazil, Argentina, Paraguay and Uruguay, which combined to form the Mercosur group of countries.
While that deal remains in place, a negotiation has been ongoing in relation to the environmental chapter – and the G20 summit next month is being watched as an occasion when these could be concluded in the margins.
Ambition to ratify
Irrespective of a payment to French farmers, it is becoming increasingly clear that getting the trade deal with the Mercosur countries approved will be an early priority for the incoming European Commission, which will be in place before the end of this year subject to ratification by Parliament.
Second term Commission president, Ursula von der Leyen had attempted to move the process forward this time last year, but met strong internal opposition led by France and then the election of president Javier Milei in Argentina put a brake on the process.
Elections this year and the changing of the guard in the Commission and Parliament, mean that it will be early 2025 when real business recommences in the EU institutions.
It is likely that Mercosur ratification will be towards the top of this list. The deal was cleared when Phil Hogan was EU Commissioner for Agriculture, but the ratification process never really got off the ground. The current outgoing European Commission took office late in 2019 and announced the Green Deal and Farm to Fork agricultural policies.
This strong environmental focus didn’t sit easily with the Mercosur trade deal that gave access for an extra 99,000t of South American beef to the EU. The Mercosur countries exported almost 200,000t of beef to the EU in 2023 (Figure 1).
Pushback
A combination of a strong Green Party membership of the EU Parliament, supported by countries where the Green Party was prominent, and the farming lobby, particularly in France, meant that enthusiasm for ratifying the Mercosur deal was low. The arrival of the global pandemic and Russia invading Ukraine meant that the EU Commission had different priorities for much of the past two years.
The energy crisis of 2022, when the EU stopped sourcing Russian oil and gas, was a reminder of the vulnerability that comes with dependence on external suppliers for key necessities. Although there was never any food shortage, there was serious food inflation for a prolonged period and that led to further pushback against the intense focus on environmental protection at the cost of production.
Economic impact assessments
Both the EU and Irish Governments have commissioned economic impact assessments of the Mercosur trade deals. At an EU level, the overall EU economy would benefit – with the boost to major European exports of cars, white goods and pharma, more than compensating for losses that would be incurred by EU beef producers. Even within agriculture the impact is small, apart from beef and poultry producers.
In Ireland it is a similar picture. In July 2021, the Implement Consulting Group (ICG) produced a 143 page Economic and Sustainability Impact Assessment for the Irish Government. It recognised that the Mercosur deal would cost Irish farmers between €44m and €55m annually, as EU beef imports are forecast to increase by 53,000t. Dale Crammond, director of MII said “Any trade agreement that brings an additional 99,000t of beef onto the European market will create challenges, particularly for steak cuts. The Government needs to carefully consider the wisdom of ratifying the EU Mercosur agreement.”
Steak meat is expected to take the biggest hit, with values falling by between 3.3% and 7.2%. However, the report found that the upside for Ireland from the deal is that overall Irish exports to the Mercosur countries would increase by €1.246bn by 2035, with the export of chemicals, including pharmaceuticals, accounting for €935m of this.
Comment
While this impact assessment was carried out before the global pandemic and Russia invading Ukraine, it is likely that the Irish economy will be even more dependent on tech companies and pharma today than in 2021. This means that there is a huge risk Irish beef producers will be asked to “take one for the team” by the Irish Government when it comes to ratification of the Mercosur trade deal. It is certainly a question worth asking our politicians as they canvas for votes in the election campaign.
The Mercosur deal agreed back in 2019 made provision for compensation to farmers and if an offer is made to French farmers, Irish farmers could expect to receive the same.
In short
Brazil, Argentina, Uruguay and Paraguay make up Mercosur.Trade deal with EU gives access for an additional 99,000t of beef with favourable tariffs.EU and Ireland would benefit from non-agri exports to Mercosur countries.
ICMSA has lashed out at media reports of a compensation package for French farmers in return for France dropping its opposition to the Mercosur trade deal. MEP Ciaran Mullooly told the Irish Farmers Journal that he understands it is being considered in Commission circles and it was also debated in the margins of a Renew agri group meeting this week.
The Mercosur trade deal was agreed in June 2019 between the EU and Brazil, Argentina, Paraguay and Uruguay, which combined to form the Mercosur group of countries.
While that deal remains in place, a negotiation has been ongoing in relation to the environmental chapter – and the G20 summit next month is being watched as an occasion when these could be concluded in the margins.
Ambition to ratify
Irrespective of a payment to French farmers, it is becoming increasingly clear that getting the trade deal with the Mercosur countries approved will be an early priority for the incoming European Commission, which will be in place before the end of this year subject to ratification by Parliament.
Second term Commission president, Ursula von der Leyen had attempted to move the process forward this time last year, but met strong internal opposition led by France and then the election of president Javier Milei in Argentina put a brake on the process.
Elections this year and the changing of the guard in the Commission and Parliament, mean that it will be early 2025 when real business recommences in the EU institutions.
It is likely that Mercosur ratification will be towards the top of this list. The deal was cleared when Phil Hogan was EU Commissioner for Agriculture, but the ratification process never really got off the ground. The current outgoing European Commission took office late in 2019 and announced the Green Deal and Farm to Fork agricultural policies.
This strong environmental focus didn’t sit easily with the Mercosur trade deal that gave access for an extra 99,000t of South American beef to the EU. The Mercosur countries exported almost 200,000t of beef to the EU in 2023 (Figure 1).
Pushback
A combination of a strong Green Party membership of the EU Parliament, supported by countries where the Green Party was prominent, and the farming lobby, particularly in France, meant that enthusiasm for ratifying the Mercosur deal was low. The arrival of the global pandemic and Russia invading Ukraine meant that the EU Commission had different priorities for much of the past two years.
The energy crisis of 2022, when the EU stopped sourcing Russian oil and gas, was a reminder of the vulnerability that comes with dependence on external suppliers for key necessities. Although there was never any food shortage, there was serious food inflation for a prolonged period and that led to further pushback against the intense focus on environmental protection at the cost of production.
Economic impact assessments
Both the EU and Irish Governments have commissioned economic impact assessments of the Mercosur trade deals. At an EU level, the overall EU economy would benefit – with the boost to major European exports of cars, white goods and pharma, more than compensating for losses that would be incurred by EU beef producers. Even within agriculture the impact is small, apart from beef and poultry producers.
In Ireland it is a similar picture. In July 2021, the Implement Consulting Group (ICG) produced a 143 page Economic and Sustainability Impact Assessment for the Irish Government. It recognised that the Mercosur deal would cost Irish farmers between €44m and €55m annually, as EU beef imports are forecast to increase by 53,000t. Dale Crammond, director of MII said “Any trade agreement that brings an additional 99,000t of beef onto the European market will create challenges, particularly for steak cuts. The Government needs to carefully consider the wisdom of ratifying the EU Mercosur agreement.”
Steak meat is expected to take the biggest hit, with values falling by between 3.3% and 7.2%. However, the report found that the upside for Ireland from the deal is that overall Irish exports to the Mercosur countries would increase by €1.246bn by 2035, with the export of chemicals, including pharmaceuticals, accounting for €935m of this.
Comment
While this impact assessment was carried out before the global pandemic and Russia invading Ukraine, it is likely that the Irish economy will be even more dependent on tech companies and pharma today than in 2021. This means that there is a huge risk Irish beef producers will be asked to “take one for the team” by the Irish Government when it comes to ratification of the Mercosur trade deal. It is certainly a question worth asking our politicians as they canvas for votes in the election campaign.
The Mercosur deal agreed back in 2019 made provision for compensation to farmers and if an offer is made to French farmers, Irish farmers could expect to receive the same.
In short
Brazil, Argentina, Uruguay and Paraguay make up Mercosur.Trade deal with EU gives access for an additional 99,000t of beef with favourable tariffs.EU and Ireland would benefit from non-agri exports to Mercosur countries. 
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