The Common Commercial Policy, including trade, is an exclusive competence of the European Union under the Treaty of the Functioning of the European Union. The European Commission acts as lead negotiator on behalf of all EU countries regarding trade agreements with non-EU countries. Member States (in Council) approve negotiating directives (or mandates) before negotiations begin, are consulted as the negotiations proceed and have final approval at Council as has the European Parliament.
The EU-Mercosur Agreement will see a comprehensive liberalisation of trade in goods. Mercosur will fully liberalise 91% of its imports from the EU over a transition period of 10 years with longer liberalisation of up to 15 years for some more sensitive products. The EU, in turn, will liberalise 92% of its imports from Mercosur over a transition period of up to 10 years. Tariff lines will also be liberalised with Mercosur liberalising 91% of its lines and the 95% in the EU.
Full details, including the line-by-line tariff breakdown of these sectors and the import/export tariff rates are not available at this time. My officials await further detail from the Commission in this regard.
Ireland’s key offensive sectors within Mercosur are dairy, particularly cheese, powdered milk and infant formula with Mercosur agreeing to large tariff rate quotas of 30,000, 10,000 and 5,000 tonnes. Ireland also has offensive interests in the pharmaceutical, machinery, and chemical sector. For each of these sectors, liberalisation takes place for over 90% of EU exports.
The Agreement also sees the opening up of Mercosur’s public procurement market. Mercosur’s procurement market has up until this agreement not been available to EU firms. The Agreement, therefore, provides Irish SMEs with substantial opportunities. It will make it easier for our firms to bid for and win valuable Government contracts in the four Mercosur countries. The EU and Mercosur have agreed to apply modern disciplines based on the principles of non-discrimination, transparency, and fairness.
Furthermore, the Agreement also includes 335 Geographical Indicators (GIs) of EU origin. Irish Whiskey and Irish Cream are included in this list. The acceptance of EU GIs will significantly improve protection of these products from false or misleading branding in Mercosur markets.
Ireland’s defensive interests are generally well known and understood at EU level. Access to the EU beef market has always been a particular sensitivity for Ireland and a number of other EU Member States. While it is disappointing that the agreement reached on beef access is more than we would have wished, it is far less than the Mercosur block originally sought. The deal that has been agreed provides necessary reassurances on food safety – i.e. that the EU will not accept any lesser standard in respect of the additional quota of 99,000 tonnes. It also ensures an extended lead-in period (over six years) before full tariff reduction levels are reached.
The EU-Mercosur Agreement also has a special chapter on SMEs. SMEs will benefit most from the simplification of exporting and customs procedures – as the savings are proportionately greater for them. A dedicated website will provide information on the Agreement for SMEs, practical guidance to importing and exporting will be published, and a dedicated data base on tariff reductions will be made available. The simplification of regulations on standards will help with trade barriers encountered by SMEs.
In relation to the Deputy’s question on an impact assessment, my Department commissioned by open tender, a study of Free Trade Agreements, more than 12 months ago. Copenhagen Economics were awarded this contract as an internationally renowned trade modelling firm. The study covered a wide range of recent and prospective EU trade agreements, including that with Mercosur. The preliminary findings, which was grounded in the information available at the time, suggest a doubling of annual goods and services exports to Mercosur over the 10 years to 2030.
In light of the conclusion of the negotiations last Friday, my Department, in conjunction with the Department of Agriculture, Food and Marine will now ensure that a comprehensive, independent economic assessment is carried out specifically on the finalised EU-Mercosur Trade Agreement. This assessment will consider the impact the Agreement will have on the Irish economy and on jobs as well as the environmental implications of the deal. It will also consider how the EU-Mercosur Agreement might exacerbate/mitigate the likely impact of Brexit for our economy. This assessment will help to inform our future actions in relation to EU-Mercosur agreement.