Beef farmers across Europe, particularly in Ireland and France, are bracing themselves for the worst. From October 2-6, representatives from both the European Union and Mercosur will sit down in Brasilia, the Brazilian capital, to try and close a deal 18 years in the making.
Since 1999 the two sides have held a trade agreement, but the historic meetings might just produce a new trade partnership.
The E.U. is scrambling to head off any economic calamity that may arise from Brexit, which has seen them put pen to paper with Canada and Japan in new trade bargains. Next on their list is the South American trade bloc Mercosur.
Mercosur comprises Brazil, Argentina, Paraguay and Uruguay, with Venezuela’s membership currently suspended. The two unions have enjoyed cooperation in the past, with exports from both federations to each other totaling some $100 million in 2015.
What’s the Beef?
Last year the two sides were very close to agreeing their new trade deal, with the issues of beef and ethanol imports to Europe causing the breakdown. Specifically worrying to the European agricultural community was the proposed 78,000-ton tariff-free allotment of beef, which they say could damage the market irreparably.
Cormac Healy, head of Meat Industry Ireland (MII), told the media recently,
“More than 12 months ago, the commission was blocked by member states from making an offer of 78,000t because of the damage it would do to the EU market – and in particular the critically important steak market – and this was before the emergence of Brexit and the massive uncertainty that it creates.”
Ireland, along with France and 9 other E.U. member-states, have proposed that the Commission delays talks with Mercosur. They argue the need for safeguard mechanisms to assure the long-term health of European agriculture.
They may face tough opposition from their allies, however, as Germany, Italy, Spain and five other nations have urged the negotiators to make a deal. Likely these countries that are less dependent on beef production for their economies would benefit from a new agreement.
Specifically, they must relish the opportunity to bid on public contracts in the Mercosur bloc. Such contracts are hugely lucrative, with those available in Brazil alone being worth some $177 million.
While a new trade deal between the E.U. and Mercosur would be lucrative, the negative impact on the European beef industry remains a hurdle. Only time will tell if the European Commission can negotiate a deal that would satisfy both the beef farmers and the industrial interests on the continent.
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