It is important, first and foremost, to acknowledge how vital international trade deals are for Ireland. As a small, open, export-led economy, we very much support balanced international Free Trade Agreements (FTAs) as they help to open up greater market access at reduced costs.
The EU-Mercosur deal was agreed in principle on 28th June after nearly 20 years of negotiations. Irish exporters have been subject to trade tariffs, barriers and restrictions when exporting to Mercosur. This Agreement will see a significant reduction, or elimination of tariffs and barriers to trade that will allow a cross flow of trading and investment between Ireland and the rest of the EU, and the Mercosur region. The EU-Mercosur Agreement will make exports from Ireland more attractive and potentially increase the demand for Irish products.
Trade with the Mercosur region has grown by 19% in the period 2010 to 2016. The EU-Mercosur Agreement will, we anticipate, allow Irish exporters to expand faster, and will open opportunities across a wide range of sectors – in business services, chemicals, machinery, medical devices and processed food and dairy. In this regard, analysis by my Department has estimated that a potential doubling of annual goods and services exports from Ireland is possible over the period to 2030.
However, I and my Government colleagues recognise and appreciate the very genuine concerns expressed by the farming community in relation to aspects of the EU-Mercosur deal, most notably the beef tariff rate quota.
The agreement reached on beef access is more than we had wished. In that regard, I raised our concerns on our agricultural sensitivities at every opportunity at European Trade Council meetings. I also raised it directly with the Trade Commissioner Cecilia Malmström, including as recently as 31st May when I wrote to the Commissioner, once again, highlighting our serious concerns, particularly given the current challenges and uncertainty facing the Irish beef sector in light of Brexit. Additionally, there has been a sustained effort right across Government in relation to this aspect, with both Minister Creed and the Taoiseach also raising this element at the highest levels, including joining Belgium, France and Poland in writing to the Commission President on the matter.
The agreement that has been reached on this sensitive area is, however, far less than Mercosur had been looking for - some 300,000 tonnes – due to the Government’s active campaign, with some other Member States, to secure the viability of the Irish and EU beef sector. While the 99,000 tonnes that is in the deal is still higher than we want it to be, it is less than one third of what they originally sought. It is also important to state that the 99,000 tonnes will be split into 45% frozen and 55% fresh and is “Carcass Weight Equivalent”.
Importantly, the Agreement also ensures that there will be equivalent food safety standards. The EU’s sanitary and phytosanitary standards will not be relaxed in any way, and they remain non-negotiable. The highest EU standards will be applied to all imported goods – especially food. The EU will maintain its strict approach on GMOs and hormone beef, and its right to set maximum allowed levels for pesticide residues.
It is also important to acknowledge that there are positives for Ireland’s food & drink sector in this deal. One of Ireland’s key offensive interests in the Mercosur deal is dairy, and the Agreement sees the removal of tariffs on 30,000 tonnes of cheese, 10,000 tonnes of milk powder, and 5,000 tonnes of infant formula on a reciprocal basis. Furthermore, the Agreement provides for the protection of 335 Geographical Indicators (GIs) of EU origin – including Irish Whiskey and Irish Cream. The acceptance of EU GIs will significantly improve protection of these products from false or misleading branding in Mercosur markets.
The EU-Mercosur Agreement also sees the opening up of Mercosur’s public procurement market - a market that was not previously available to EU firms. It will make it easier for Irish firms to bid for, and win, valuable Government contracts in the four Mercosur countries, and the EU and Mercosur have agreed to apply modern disciplines based on the principles of non-discrimination, transparency, and fairness.
There will also be special provisions for SMEs in the Agreement. 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 of tariff reductions will be made available. The simplification of regulations on standards will help with trade barriers encountered by SMEs.
In relation to climate change, Mercosur including Brazil, will have to fully implement the Paris Climate Agreement as part of this deal, as well as meet specific commitments on reforestation.
The Agreement also places particular emphasis on the development of trade between our two regions in a way that is conducive to decent work for all, including women and young people, with each party recognising the importance of core labour standards as defined by ILO Conventions.
In light of the conclusion of the negotiations on 28th June, my Department, in conjunction with the Department of Agriculture, Food and Marine is now ensuring 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 the EU-Mercosur Agreement.