Since the freeing of international trade between countries first became a global issue in the aftermath of World War II, the direction of travel has been reduction and elimination of tariff barriers on trade and movement to recognise similarity of controls and standards.
The latter is often an as big – if not bigger – barrier to international trade as tariffs. Agrifood has traditionally had the highest tariffs and greatest non-tariff barriers as well.
Ireland’s first major steps into the world of international trade deals were taken when we joined the then-EEC. Fast forward a generation and the EU has grown to 28 member states, negotiating trade deals with other countries or blocs on behalf of members.
By the end of the decade, the EU had deals agreed with Mercosur, Canada, South Korea, Japan, Mexico and others. Meanwhile, trade negotiations with the US had been put on hold, with the arrival of President Trump in The White House.
Reconciliation of trade and environmental policy
Trade agreements between countries or groups of countries reflect shared views on trade policy. However, in the case of the EU, this has been complicated by the development of strict environmental and climate policies that aren’t fully reflected in potential trade partners.
This has added complexity to the deal with the four South American Mercosur countries. This was agreed four years ago but has not yet commenced the ratification process.
A huge element of this delay is caused by the rapid increase in Amazon rainforest clearance in the years after the deal was agreed, despite a commitment to cease and replant forest already cleared.
To address this, the EU have added an annex or a side letter to the agreement that is under negotiation with the Mercosur countries.
Also, since President Lula returned to office at the beginning of the year, the rainforest clearance has greatly reduced and EU Commission president, Ursula von der Leyen, has said that she aims to have the deal ratified this year.
The Community of Latin American and Caribbean States (CELAC), which is 32 countries including the Mercosur group, are in the EU this week for a summit.
The Mercosur deal has been discussed in the margins, and the Taoiseach has flagged Irish concerns, but this isn’t the forum where the updates will be finalised.
Not just Mercosur
While it is the Mercosur deal that scares EU farmers the most, a deal with Australia will also dramatically increase their access to EU beef and sheep meat markets.
Australia’s political leaders were in Europe last week to sign a deal, but negotiators couldn’t close the gap and the deal is off for now.
This negotiation, which has been ongoing since June 2018, has been distorted by Australia and their neighbours in New Zealand securing exceptional access for agriculture produce to the UK since the beginning of June this year.
Negotiations will resume after the summer break, but while EU access for beef and sheep meat will be generous, it won’t be on par with the UK.
The UK leaving the EU was the biggest disruption to trade on this continent since the formation of the European Union.
As well as the Australia and New Zealand deals, the UK this week signed the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP), which may be symbolically significant – but commercially trivial, with a 0.08% gain to the UK economy.
“As useful as an Embassy on the moon”, was one scarcastic comment made to the Irish Farmers Journal about the deal.
The UK leaving the EU was the biggest disruption to trade on this continent since the formation of the European Union
CPTPP is a fairly loose arrangement between the now 12 members, with the ambition to remove 95% of tariffs on trade between them – but it is the remaining 5% that are the difficult ones, as well as non-tariff barriers.
EU policy of trade deals doesn’t reconcile with the constraints imposed on EU farmers by the EU Green Deal. No major agriculture-producing country outside the EU is imposing constraints on farmer production in response to climate and environmental pressures.
In the US, for example, the administration announced last week a $300m (€268m) investment “to improve measurement, monitoring, reporting and verification of GHG emissions and carbon sequestration” as part of a “$20bn overall investment to advance climate smart agriculture”, with no mention of production constraints.
Other countries, such as Brazil and Australia, have planned for increased output, with climate and environmental policy having to fit into that – the opposite of the EU.