European and Irish farmers have escaped a damaging deal

By Padraig Walshe IFA President

09 August 08: There is relief across the farming community and rural Ireland generally that agriculture escaped the Mandelson cuts in the WTO negotiations in Geneva last week.

Following an all-out effort by WTO Director General Pascal Lamy, and yet further unilateral concessions to Brazil on ethanol by EU Trade Commissioner Peter Mandelson, the WTO ministerial meeting finally collapsed after ten days of intense negotiations. There is now no real prospect of an early revival of the talks.

IFA calculated that the Mandelson offer in effect amounted to 1.8 million tonnes of beef imports. Separate analysis by the French FNB concluded that EU beef imports would have risen from 500,000 tonnes to two million tonnes per year.

The greatest damage would have been in prime cuts, where one out of every two steaks consumed in Europe would have been South American.

As the biggest exporters within the EU market, it is clear that Irish beef farmers would have been the main casualties, and cattle prices would have fallen to a totally unviable €2/kg (70p/lb).

At a crucial stage in the talks, French President Nicolas Sarkozy was true to his word and tackled Mandelson, raising the key issue of food security and defending European agriculture. The Irish beef industry can thank the French in large measure for our escape from a catastrophe.

Claims

I want to challenge the totally unsubstantiated claims regarding potential losses due to the WTO collapse made by so-called free trade spokesmen and commentators in the media.

While the losses in agriculture were immediate and quantifiable, any potential gains for Ireland in services were not being negotiated in Geneva, and all Pascal Lamy could achieve was a signalling conference that might show results in 2027.

In reality, the Doha trade round collapsed when the United States insisted on its right to support US farmers in future, and China and India refused to allow imports of cotton, rice, sugar and soybeans produced in the United States with the benefit of Government farm programmes.

China, with 800 million subsistence farmers, and India, with a further 600 million farmers, simply would not tolerate their internal market prices being undermined by imports from the more powerful US.

As regards the poorest countries in the world, mainly in Africa, they would have been worse off under the deal on the table in Geneva. The deal would have cut EU market prices and devalued the EU's existing trade agreement with those countries, known as the Everything But Arms (EBA) agreement, which provides tariff-free access to the EU market for the world's 49 least developed countries.

For Irish exporters of goods and services, the outcome in Geneva changes nothing. The same trading rules will continue to apply, as applied during the export-led growth of the past decade.

There is no evidence that the world will regress into protectionism, and the rules-based enforcement function of the WTO remains in place.

The most lucrative market for Ireland continues to be the EU single market, where our exporters have unlimited free access to an affluent market of almost 500 million people.

Ireland's computer industry in hardware and software, pharmaceuticals, financial services and the food industry will continue to have the same opportunities after Geneva as they had previously.

Our priority now must be that Europe gets away from the flawed basis of our Doha offer, and any future trade negotiations must start with a clean sheet. In recent years, while these negotiations have been taking place, the world food market situation has changed dramatically.

Food supply is increasingly constrained by water shortages, extremes of climate and high energy-costs. Food demand is rising on the back of growth in population and incomes, especially in countries with emerging economies.

Food security is now a pressing concern of governments worldwide.

The Government's strategy in Europe must be to support the French in tearing up the EU WTO offer, as the other parties have walked away from the table.