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    Mercosur reawakens, but climate differences make short-term deal unlikely
    Mercosur countries keen to get discussions on a trade deal with the EU moving again, but Hogan dismissive.

    The news in Thursday’s Irish Farmers Journal on the €100m was an overdue but welcome piece of good news for farmers. Of course, it isn’t a bonus or windfall – it merely will partially compensate farmers for losses incurred because of market disruption caused by Brexit.

    A good news story is rare enough for Irish farmers but bad news never seems far away. At the start of the week, reports from South America suggested that the long-running Mercosur trade negotiations were gathering momentum, with a trade deal between the two blocs possible in coming weeks.

    This created alarm among farm organisations and European Commissioner for Agriculture Phil Hogan was blunt in his dismissal of the prospect of a deal.

    What is Mercosur?

    Mercosur is the umbrella name for a group of South American countries including Brazil, Argentina, Uruguay, Paraguay and Venezuela, who have been suspended since 2016.

    It was established in the early 1990s, loosely modelled on the then EEC and while achieving growth in trade between themselves, it remains a loose federation and never achieved the same unitary purpose that the EU currently does.

    Often disagreement between members of Mercosur can be as great as the difference with those they are negotiating with, which is largely why a deal with the EU has never been concluded despite negotiations running since 1999.

    Pros and cons of a deal

    There is broad support across the EU for a trade deal with Mercosur, with the auto and pharmaceutical industries along with financial services especially benefiting. It would also be fine for much of agriculture with even some opportunities for the dairy sector.

    However, it would be a disaster for beef producers as beef access to the EU is the key demand from the South American side.

    The Mercosur members are all in the top five net exporters of beef in the world and currently supply over three-quarters of all beef imported into the EU.

    European Commissioner for Trade Cecelia Malmstrom (right) with Commissioner for Agriculture Phil Hogan (left) at WTO Ministerial Conference in Buenos Aires late in 2017.

    Long-running negotiation

    A deal was close in late 2017, with the EU understood to have been willing to give access for 99,000t of tariff-free access for beef, though this was never formally offered.

    This fell a long way short of Mercosur expectations, although other issues such as access for the auto industry and recognition of EU PGIs caused the breakdown at that time.

    Since then, there has been a feeling in the EU that Mercosur hasn’t progressed on these areas and if anything backtracked on the December 2017 position.

    South American politics

    The election of President Bolsonaro in Brazil in October last year adds a further dimension to the negotiations. He was originally in the President Trump style of being protectionist as opposed to free-trade inclined and this was a further impediment to a deal taking place. However, recent reports suggest that he is more amenable to trade negotiations with the EU and in this he is very much encouraged by his Mercosur partners ahead of Brazil assuming the presidency of Mercosur later this year.

    Climate change

    A trade deal with Mercosur now, however, presents a considerable dilemma for the EU as acceptance and participation in the Paris climate accord is a basic requirement for the EU making trade deals with countries around the world.

    President Bolsonaro is opposed to Paris and is closely aligned with President Trump’s thinking on climate change.

    Therefore, it is inconceivable that the EU could make a trade deal with Mercosur in these circumstances but this week’s reports are a timely reminder to Irish farmers that the threat of a deal continues.

    Brexit uncertainty rolls on and no-deal risk rises
    Breakdown in negotiations between main Westminster parties on support for Brexit withdrawal agreement means risk of no-deal Brexit rises.

    The announcement of a €100m fund to aid beef farmers who suffered bad prices since last autumn because of Brexit is recognition of the problem Brexit is already having, never mind if the UK leaves the EU at Halloween.

    Unfortunately, that is a problem that is very much ongoing as there is no evidence that the UK is in a position to resolve its internal political differences to ensure an orderly departure.

    Fatigue

    Brexit fatigue has meant that as an issue it has dropped down media priority since the deadlines at the end of March and again in April were missed.

    Council elections in England delivered a predictable hammering to the Prime Minister’s Conservative party, with the main opposition Labour party faring little better.

    Next up are the European Parliament elections on Thursday 23 May, which neither of the main parties ever wanted to take part in but are a condition of the extension of UK membership of the EU until 31 October.

    UK political chaos

    Incredibly, the Conservative party is languishing in the polls, with the Brexit party appearing to have as much support as the Labour and Conservative parties combined.

    In addition, talks took place between the main parties in Westminster this week on cross-party support for another attempt to get parliamentary approval for the Prime Minister’s withdrawal agreement.

    This is being brought back for another vote in June but there is little evidence to suggest it can succeed this time having failed on three previous occasions.

    PM’s days numbered

    The other relevant political news coming out of Westminster this week is that the Prime Minister’s time in office is drawing to a close. Her survival in office to this point is a reflection of the chaos in the UK political system as one defeat in parliament usually means departure whereas for this prime minister defeat has become the norm.

    The likely disaster in next Thursday’s elections on top of the council elections will hasten her departure

    The likely disaster in next Thursday’s elections on top of the council elections will hasten her departure even if the party doesn’t appear yet to have the mechanism to force her out because party rules mean she cannot be directly challenged again until December.

    European Commissioner for Agriculture Phil Hogan delivered for farmers this week but unfortunately he could be called on to do so again as the prospect of a no-deal Brexit increases

    Currency

    In practical terms, developments of recent days mean that Irish sales to the UK are now worth 3% less than a fortnight ago. Then, the sterling-euro exchange rate meant that €1 was worth under 85p, whereas today it is worth almost 88p.

    This means that when Irish exporters are selling to UK customers in sterling, the sterling they receive is worth 3% less than it was two weeks ago when it is converted into euro.

    Currency volatility is the everyday impact of Brexit on Irish farmers. The dire consequences of a no-deal Brexit and proposed UK tariff arrangements in this event have been well documented. This week, the European Commission and Government delivered on the principle of having the back of Irish farmers on Brexit. Unfortunately, this request may have been just the first.

    The Irish Farmers Journal launches Balmoral Show app
    Plan your trip to the Balmoral Show with the new Balmoral Show app sponsored by Kubota.

    The 151st Balmoral Show takes place from Wednesday to Saturday 15 to 18 May 2019. The new Balmoral Show 2019 app, sponsored by Kubota, is the must-have app for anyone going to the show, complete with an offline stand locator.

    Plan your visit with our event planner or make sure you don’t get lost in the car park with our "Find My Car" feature and much more.

    This app is vital for anyone going to the Balmoral Show and you can download it from the links below. Enjoy your visit!

    To download the app, follow these links:

  • on an Apple iPhone or iPad, find the Balmoral Show app by the Irish Farmers Journal on the iTunes store
  • on an Android smartphone, find the Balmoral Show app by the Irish Farmers Journal on the Google Play store
  • The app is FREE to download and offers unlimited access to free content.

    Read more

    All about Balmoral Show