New markets elude Ireland and EU as reliance on agriculture stalls deals
European Commission president Ursula von der Leyen with Taoiseach Micheal Martin. Brussels has struggled to close agreements in recent years because of sensitivities in its 27 member states over agricultural produce. Picture: Clodagh Kilcoyne/PA Wire
US president Donald Trump's hostility to established international trade agreements and his willingness to inflict trade damage on friend and foe alike, has created a major dilemma for foreign government officials.
Should they curry favour with the US in the hope of easing tariffs and hold on to exports to the US? Or should they scurry around the world, seeking ways to find new export markets outside the ambit of the US?
This should be the moment when Ireland and the other EU member states band together to curb their dependence on America. New trade deals urgently need to be signed up to diversify Ireland’s export markets and reduce our over dependence on the US. Of particular urgency is the need for the EU and Ireland to sign off and ratify the Mercosur and CETA/Canadian free trade agreements.
Brussels has struggled to close agreements in recent years because of sensitivities in its 27 member states over agricultural produce. Although Ireland has a €5bn trade surplus in agrifood, and the rest of the EU has a €58bn surplus, it does not want to allow more chicken, lamb, or beef into the union, particularly after huge farmer protests in recent years. Ireland, France, and a number of other EU members have yet to ratify a deal signed with Canada in 2016 which would allow more beef imports. The Mercosur deal with South American countries, which has major potential export opportunities, has stalled because of objections by France, Austria, Holland, and Ireland who have been most vocal in reflecting farmer concerns about imports.
By contrast, in December 2024 Switzerland and the other EFTA countries Iceland, Liechtenstein, Norway managed to sign off on what Indian prime minister Narendra Modi hailed as a first for India with a European partner, which included a binding commitment of $100bn (€87bn) and creating 1m direct jobs in India over the next 15 years.
This is a wakeup call to Ursela von der Leyen and the European Commission, who have been unable to close out a free trade agreement with India, despite years of discussion. It also puts EU members states, who trade with India, at a distinct competitive disadvantage to Switzerland and the other three EFTA countries.
Ireland, in particular, could benefit from an open market entry into the vast India market. Switzerland exports much the same range of goods as Ireland – pharmaceuticals, medical devices, and chemicals, and will get an immediate advantage over Irish exporters. Without an EU free trade agreement, Ireland has not been able to crack the market, held back by high entry tariffs. Current Irish goods exports to the market are at €957m, well below potential and at the same level we export to Hungary.
Two years ago, EU and Indian leaders agreed to resume stalled negotiations for a free trade agreement (FTA). And again, in February Ms Von der Leyen met India president Mr Modi, indicating that an agreement by the end of the year was possible.
However, negotiators in Brussels have been worried about committing to the binding agreement of $100bn investment and creating 1m direct jobs in the next 15 years, which would match the commitment Switzerland and the EFTA countries have given to India in their FTA.
The failure to close out on FTAs with Mercosur, Canada, and India is also holding back services exports, which are now the largest component of Ireland's international trade. Ireland’s services trade with India is a typical example - reaching €4.5bn last year, with potential to increase substantially business services, education, tourism, and medical services. However, the free trade deal with Switzerland and other EFTA countries, specifically targets free trade of services and gives clear advantages to Swiss services exporters to India.
Additionally, Ireland has become a preferred choice for Indian students and job seekers; Ireland’s Indian immigrant population has grown 170% since 2016 due to Brexit and has seen a steady rise, especially among those pursuing higher education qualifications.
This is now in jeopardy as the India agreement with Switzerland and the other EFTA nations offers to create 1m jobs in India, inevitably cutting across outsourcing and training opportunities for Irish companies.
These stalled free trade agreements put into serious focus the value of the special status that Ireland and other EU member states give to the farming lobby, who have been the main stumbling block to the Mercosur and Canada trade agreements.
