Beef for BMWs – Mercusor deal will be on menu for WTO in Buenos Aires

A WTO ministerial conference wouldn’t usually attract much interest from Irish farmers but the one starting in Buenos Aires today could have a serious impact on our beef sector.

The conference itself is expected to be low key, with the lack of engagement from the US administration frustrating the WTO’s wider ambitions.

However, in its margins, the EU and Mercosur will be making a push to finalise a trade deal that would not be good for Irish and EU beef.

If a trade deal between the EU and the group of South American countries that make up Mercosur were concluded, it would be hailed as a major success at WTO and one in the eye for the US. Since the decision of the UK to leave the EU and President Trump withdrawing the US from the Trans Pacific Partnership deal, the EU has sought to fill the vacuum.

A deal was made with Japan, the Canadian deal has come into effect and discussions are about to start with Australia and New Zealand.

Huge push

A huge push has been made to get the deal with Mercosur that has been in stop-start negotiations since 1999 over the line, particularly since Argentina elected a new free-trade orientated president in late 2015.

Much of the negotiation is now complete but the final sticking point is access to the EU market for agricultural produce, particularly beef and sugar.

A Mercosur team were in Brussels for a round of negotiations since 29 November, only finishing on Friday.

While they launched an intensive charm offensive, there is a belief in many quarters that they came nowhere near matching recent EU offers on the controversial beef and sugar categories.

Mercosur access

There is a considerable divergence of opinion within the EU on what level of access Mercosur countries should be granted.

DG Trade, who really want the Mercosur deal done to wrap up a successful year, are facing strong opposition from countries with sugar and beef interests.

France, with strong Irish support, has been actively campaigning against any further beef offer to the 70,000t that was put on the table a few weeks ago. That doesn’t meet the Mercosur expectations and will be a real sticking point in closing a deal.

Trade interests in the EU will point to the huge overall benefit that the EU would gain from a deal, with EU export interests gaining four times as much as Mercosur would. The big winners from the EU would be the motor and automobile parts businesses, as well as pharma and services. Mercosur’s only real interest is in getting access for agricultural produce.

Beef for BMWs

Getting a deal depends on EU agriculture, beef in particular, being sacrificed for these other sectors – beef for BMWs is one slogan that has been doing the rounds in Brussels.

The EU is aware of the cost to the beef industry as its own cumulative impact assessment concluded that beef was the one sector that would be a real loser in the event of any trade deal. That is the strongest card in the hand of those on the EU side who are opposed to the deal that is supported by all the large member countries with the exception of France.

Across Europe, beef production and processing industries are located in regions that do not attract huge industrial investment. Anything that damages the beef industry has a wider social effect on rural communities than the actual value of tariff saved.

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