The prospect of increased imports into the EU of high-value beef from South America’s Mercosur countries is one of the few clouds on the horizon at the moment for cattle farmers. The EU stands to lose up to 3% of its farm income, with many beef farmers going out of business as cattle prices plunge.
The deepest losses would be felt by cattle farmers in Ireland, Britain and France, unable to compete with a 200,000-ton annual increase in beef imports.
The European Commission has said a trade deal would deliver net economic benefits worth €4.5bn a year to both regions, but at the main expense of EU cattle farmers.
However, when the EU next sits down to trade talks in July, Argentina could be missing from the Mercosur delegation. Also, Brazil would be unlikely to continue in negotiations without Argentina, the other major member of Mercosur, which also includes Uruguay and Paraguay.
EU-Mercosur relations have been strained by threats in Buenos Aires to the future sovereignty of the Falkland Islands (Las Malvinas), as well as Argentina’s decision to strip Spanish company Repsol of its controlling stake in oil company YPF.
This has led Spanish foreign minister José Manuel García-Margallo to warn that far from getting involved in trade deals with the EU, Argentina risks being cut off from access to international credit and loans.
The US and Mexico have led others in voicing serious concerns at the tactics of Argentine president Cristina Fernández de Kirchner.
Spanish industry minister of Jose Manuel Soria said that the government was likely to lobby the EU to back Spanish opposition to Argentina.
Meanwhile, Europe’s foreign-policy chief Catherine Ashton has cancelled a meeting of an EU-Argentina joint committee, and European Commission president Manuel Barroso expressed “serious disappointment” with the turn of events.
EU Justice Commissioner Viviane Reading said: “When someone attacks Spain, they are attacking all the European Union.”