European Union beef prices would be cut by more than 8% and meat production across the EU would fall in value by more than €3bn if a trade deal were agreed with Mercosur, according to preliminary assessments from an agriculture advisory body to the European Commission.
According to the Joint Research Centre reports from the Irish press, one of the countries together with France leading a campaign against a trade agreement with Mercosur, Irish farm incomes could be reduced by 2.7 to 4.2% as a result of such a deal.
Four possible scenarios were considered for the study: 1) The EU 2004 offer; 2) The EU 2004 offer and the EU concessions at the Doha round of world trade talks; 3) The Mercosur request of 2006 and 4) The Mercosur request of 2006 and the EU concessions at the Doha round of trade talks.
The fourth of these was easily the worst scenario for European farmers as the sector would be hit with significant increases in meat imports from Mercosur, points out the Irish press. “This scenario would see Mercosur granted a 300,000t tariff rate quota (TRQ) for beef and a TRQ of 250,000t for poultry and 20,000t for pork”, which would result in a € 3 billion cut in the value of EU meat production and knock € 6.8 billon off total farm incomes.
Under the best case scenario, the initial EU offer in 2004, overall agricultural income would fall by 0.5% but beef production would be cut by 20,000 tons and the value of meat production would fall by €250m.
Under the fourth scenario, skim milk powder production would be cut by 60,000 tons and the butter price could fall by more than 7%. The impact was described as ‘mild’ under the other scenarios.
However, the study accepted that the overall impact of a possible EU-Mercosur trade deal was negative and the intensity of its impact would vary across member states.
Meanwhile, an assessment of a trade deal on behalf of the trade arm of the commission found that there would be a net gain for the EU, with car manufacturers, telecommunications firms and service providers being the big winners.
EU Trade Commissioner Karel De Gucht has indicated that he will be ready to table an offer to Mercosur within the next two months. EU officials are meeting with their Mercosur counterparts in the Paraguayan capital Asuncion later this week.
Agriculture Commissioner Dacian Ciolos has pledged to keep member states informed on the talks and that they will see any offer before it is tabled.
In Dublin, Minister for Agriculture Simon Coveney described the assessment of the Mercosur deal as quite shocking. He added that Ireland cannot allow the Irish and European agri-food sectors to be sacrificed to get a trade agreement.
Mr Coveney called for the commission to produce a full impact assessment of a Mercosur trade deal as a matter of urgency.
However the Irish Farmers’ Association (IFA) president John Bryan said the EU Commission's assessment of a Mercosur trade deal seriously underestimated the hit on Irish and European agriculture.
Bryan said the commission's estimate of losses of € 3bn had little credibility against the European farmers' union's, COPA, own assessment, which estimated losses at closer to € 30bn. Mr Bryan challenged the commission to explain the difference.