Even as farmers await the Brexit outcome, they fear it could be followed in the first half of 2021 by a potentially even bigger trade shock, if the EU ratifies the Mercosur trade accord that would grant privileged access to South America’s largest trading bloc.
The EU-Mercosur Trade Agreement of 2019 will be presented to EU member states and the European Parliament for a vote of approval.
As Portugal prepares to take over the EU’s rotating council presidency from January 1, Portuguese leaders are expected to ensure that the Mercosur agreement moves forward.
Countries such as Spain, Italy, Portugal, and Sweden are leading efforts to overturn resistance to the Mercosur deal, which is led by France.
Ireland is also one of the countries which has expressed opposition to the Mercosur deal — the largest trade agreement the EU has ever negotiated — having raised concerns, along with France, in EU Agriculture Council meetings in 2020.
Taoiseach Micheál Martin has said the climate change context in Mercosur cannot be ignored.
At November’s Agriculture Council meeting, agricultural ministers from Austria, Bulgaria, Lithuania, Luxembourg, Romania, and Slovakia also raised their opposition to the Mercosur deal, on sustainability grounds, with the Austrian agriculture minister stating that “for us, the highest environmental and climate protection standards are not negotiable.
“It cannot be the case that the agreement will lead to further deforestation of areas of the rainforest.”
Ireland, represented by Agriculture Minister Charlie McConalogue, did not join the four member states who formally supported the Austrian criticism of the Mercosur agreement.
After two decades of stop-start negotiations, EU trade negotiators agreed a deal with the Mercosur group of Brazil, Argentina, Uruguay, and Paraguay in 2019.
France was first to warn that it could not be ratified, because of Brazil’s rapid destruction of the Amazon rainforest and insufficient respect for the Paris climate accord.
As for Ireland, Mr McConalogue said in the Dáil last week that Ireland was disappointed with the inclusion of a 99,000-tonne tariff-rate quota for beef from Mercosur countries.
“If ratified, this quota would be phased in under the agreement in six equal tranches over five years.
“Of the quota, 55% is for fresh high-quality beef, with the remainder being frozen,” said Mr McConalogue.
“The former Taoiseach and current Tánaiste, Deputy Varadkar, announced at the time that a whole-of-government review of the agreement’s economic and sustainability impacts on Ireland would be undertaken.
“This research is being led by the Department of Enterprise, Trade and Employment, which has overall responsibility for trade policy, with specialist input and assistance from my Department. Implement Consulting Group was requested to carry out this work, and the report is due to be completed shortly.
“It will help to inform Ireland’s approach to the ratification process, which is expected to commence in the first half of 2021, during the Portuguese EU presidency.
“Notwithstanding the review, I am concerned about the impacts that such a trade deal could have on our livestock sector. There are potential positives, but we should be concerned about the possibility of beef produced less efficiently coming into the EU. The EU needs to look on the trade agreement in that light.
“There must be equivalence between reductions within the EU and what we expect of imports entering the Union.
“This is particularly the case from the points of view of sustainability and the environment.
“The tariff-rate quota’s potential impact on European beef production, and Irish beef production in particular, is concerning.”
“There must be an equivalence of standards with those we apply to the sustainability of our produce, especially in terms of the carbon footprint.”
In 2021, pro-trade member states are expected to ramp up support for the Mercosur deal by introducing a system of environmental oversight with South American countries.
Nine EU member states (the Czech Republic, Denmark, Estonia, Spain, Finland, Italy, Latvia, Portugal and Sweden) have written to EU Trade Commissioner Dombrovskis to argue that “not signing and ratifying the EU-Mercosur Agreement will not only affect the EU’s credibility as a negotiating and geopolitical partner, but will also strengthen other competitors’ position in the region.” Dombrovskis has agreed with Mercosur to negotiate additional environment commitments (a first for any EU trade deal), without reopening the accord.
But France’s President Macron has signalled the deal’s economic advantages are not worth the political cost, even if the Mercosur side agreed to additional environmental commitments.
As well as environmental failings, other political considerations for France include a flood of cheap South American beef, wine and sugar competing with France’s agricultural produce.
France was among the countries which refused to ratify the EU-Mercosur agreement at the meeting of European trade ministers on November 9.
“We must have assurances that the Paris Agreement is being complied with, that increased trade does not lead to increased deforestation, and that European sanitary and phytosanitary standards are being complied with,” Trade Minister Franck Riester said
The governments of Germany, and Netherlands have openly questioned the agreement.
In June, the Dutch Parliament approved a resolution that withdraws its support for the Mercosur deal.
With the Greens in Austria’s governing coalition, it’s no surprise that agriculture minister Elisabeth Köstinger has reiterated that the country’s position on the agreement remains a “clear no”.
Belgium is split on Mercosur, with the Walloon Parliament unanimously opposing the draft trade agreement, but the Flemish government supporting it for its potential for the automotive, machinery, agri-food, international maritime services and construction industries.
The federal government is for the moment supporting Wallonia’s position.
The European Parliament has expressed “deep concerns” over Brazilian President Jair Bolsonaro’s policies.
When the final text of the accord is translated to the languages of all EU and South American countries involved, each country will have an internal parliamentary discussion of the deal, before deciding whether to approve it.
The EU Parliament will also have to approve it, as well as the individual parliaments of the 27 EU countries and four Mercosur states.
As for the political cost which Macron has warned against, the main public concern is the growing destruction and deforestation in the Amazon rainforest.
A survey by the UK pollster, YouGov, has shown three out of four Europeans want the accord to be stopped if it contributes to deforestation and environmental damage.
Almost 80% of respondents in France, Spain, Germany and the Netherlands wanted to stop the agreement on the basis of its risks.
Their fears may have subsequently escalated, after huge wildfires in the region between the Paraguay, Parana, and Uruguay rivers, in recent months.
This resulted in a 170% increase in wildfires in Argentina, linked to drought bringing the huge Parana and Paraguay Rivers to their lowest level in half a century, and drying the Pantanal, the world’s largest wetlands, situated where Brazil, Bolivia and Paraguay meet.
Fires were fanned by strong winds and high temperatures, and broke all records in Paraguay at the end of September and the first week of October.