Mercosur (Southern Common Market) is the South American trade bloc. That’s Argentina, Brazil, Paraguay, Uruguay, and Venezuela — although Venezuela is currently suspended.
It’s in the news because the EU has completed a trade deal with it. There are lots of benefits, but, in the give and take, beef farmers see themselves as losers. The facts are more complicated, but the politics are not.
Beef farmers certainly have a problem. Half of what’s produced here goes to Britain. A no-deal Brexit puts that business at imminent risk.
That’s not to speak of a sliding sterling, which has them on the back foot already. It is a measure of the muscle of farm politics and its toxicity that something which has a far larger and overwhelmingly positive impact can be funnelled through the prism of a single interest. Part of the intensity of the attack on the deal, and misplaced clawing at Agriculture Commissioner Phil Hogan has as much to do with farm politics as farm facts.
There is bitter rivalry between three competing farm organisations: The IFA, the ICSA, and the Beef Plan movement. Overlay that with the fact of internal elections in the IFA — which is still recovering from its own annus horribilis — and you have a perfect storm. Mercosur and Brexit are coincidences, but together they create a context.
The underlying fundamentals of Irish beef, its quality notwithstanding, is that it is inherently loss-making. Even with substantial subsidies, it delivers what farmers rightly say are poor returns. But, and here is the key farm fact, 100,000 farm families derive some element of income from beef. That matters not just in farm politics, but in national politics, too.
When it comes to trading with those big four South American countries, Ireland is a big winner. We export €483m in goods and import €480m. On services, however, we export €1.4bn, but import just €302m. To deepen that beneficial relationship, Europe had to give as well as get. As we are at pains to emphasise, we are part of the EU 27 and our key trade deals are negotiated by Brussels.
It is an arrangement that works spectacularly well for us. In relation to Brexit, it is a defence and solidarity that is essential to protect our interest. That interest is simple. Some 700,000 Irish jobs depend on exports outside the EU. This deal provides an opportunity for more. It’s good for Ireland and that’s the beef.
Of our exports to the four, the bulk are pharmaceuticals, representing €241m, and chemicals, at €73m (as of 2018). The current tariff on them will go from 14% to 0%. Key brands essential to maintaining export values, such as Irish Cream (liqueur) and Irish whiskey, will have the same protection there in the future as they do in the EU now.
That prevents rip-off imitations. I could go on. There is no analysis of this deal that doesn’t add up very positively for Ireland in the round. There is no deal possible that doesn’t give something in return. The Brazilians were always going to insist on getting more beef into Europe, and the Germans always wanted their cars exported there.
This deal was 25 years in the making. There were a lot of stop-start, and some near-death, moments. It will take another four or five years to have a high-level agreement legalised, and then ratified, by the EU Council parliament and national parliaments. It has come to fruition, partly as a defensive reaction in Latin America against US president Donald Trump’s protectionism.
The South Americans are strategically too dependent on North America, just as, ironically, Irish beef farmers are too dependent on Britain. Free trade (and its benefits) is a recurring lesson of Trump and Brexit. Its consequences are also among the causes.
It is an irony and a cause that, as David Goodhart, the former editor of Prospect magazine, put it, we are divided “between those who see the world from Anywhere and the people who see it from Somewhere”.
The Anywheres dominate, but the Somewheres are the dislocated and unsettled. It’s a competition of globalists versus nativists. If that is the big picture, ironically, we have no more ardent globalists than our beef farmers.
It was many years ago, but I do recall accompanying Bertie Ahern and Liz O’Donnell on a blazing hot day in Cairo, as they bearded Colonel Gaddafi in his tent, pitched in the garden of the palace provided for him. One focus was the group of very tall ladies toting petite submachine guns from shoulder straps. Another was the Colonel telling about all he had done to help the IRA.
Our leaders were focused on getting Irish beef into Libya. The IFA was focused on piling on the political pressure to ensure that none of the routine business of an EU-Africa summit would distract a Taoiseach from his political essentials. And so it continues. There are EU trade agreements with Japan, Vietnam, Mexico, Canada, and China, all of which benefit Irish beef.
Moving our exports is always a priority. And the Minister for Agriculture, Michael Creed, has been on the ground, wheeling and dealing. I live near the North Circular Road in Dublin, where, until the 1970s, the cattle market stood. That’s why Stoneybatter is called Cow Town. Cattle bred in the west and fattened in the east were driven into the city.
Some were sold to the butchers and dealers who supplied Dublin. Most were driven on down to the port and exported live. It wasn’t a model that worked. Joining the EU, or the EEC as it was at the time, did work. A lot changed. Some of that change was hard. But the benefits have been enormous.
Ireland is a beneficiary of globalisation and many farmers have been primary beneficiaries. There is vast — if unevenly spread — wealth in rural Ireland. It has percolated down through co-ops, such as Kerry and Glanbia. It is generated off-farm through a sophisticated and globalised food industry.
It is not just the big picture economically. On-farm, the EU has delivered. Delivery includes exact replicas of the Mercosur agreement with other countries. The difference is not one of principle, it is that based on the very same principle of reciprocity, it enables Irish beef to be exported elsewhere.
The price of beef matters because farmers are custodians of the land where it is raised. They are an essential part of the rural economy. Their numbers mean they matter politically in key constituencies, where the final outcome of the next election will be decided. That’s why Fianna Fáil leader Micheál Martin jumped into the ring to fight with Phil Hogan.
It was good political judgement. It doesn’t change the fact, however, that the deal between the EU and the Southern Common Market is overwhelmingly positive for Ireland. When it comes to trading with those big four South American countries, Ireland is a big winner