While any reduction in tariffs for dairy product entering South America will be welcome news to the EU industry, the overall volume of product tariff free is relatively small.

The text in the agreement in principle suggests the Mercosur deal will remove the 28% tariff on 30,000t of EU cheese, 10,000t of skim milk powder and 5,000t of infant formula. Volumes will be phased in equal stages over 10 years.

The 30% tariff on EU butter is expected to be scrapped instantly, along with duties on yoghurt.

So is the South American market a growing and affluent market for high-value dairy product? Probably not. In 2019, dairy trade in the region is down as the exporters lack product and the importers lack demand.

To put the numbers in perspective, the EU was exporting about 256,000t of cheese to Russia when it was banned in 2013.

The 30,000t of tariff-free cheese to South America would obviously provide a home for some of this displaced trade, but it’s not a game changer.

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