The heavyweight beef producers of South America’s Mercosur group last week concluded a wide-ranging trade deal with the EU two decades after talks began.
The deal will result in tariffs on 99,000 tonnes of Mercosur beef being progressively cut from about 20% to 7.5% within six years.
It replaces individual quotas for the EU for Mercosur group members Brazil, Argentina, Uruguay and Paraguay.
NZ and the EU are in the middle of their own trade talks and aim to conclude a deal by the end of this year.
Improving NZ’s paltry annual quota of 1300 tonnes is a high priority for its negotiators.
Beef + Lamb NZ’s representative in Brussels Ben O’Brien says European beef producers are struggling with low returns and are sensitive to any opening of their domestic market to increased imports.
There has been an outcry from European farming groups who feel they have been sacrificed by the European Commission’s negotiators for increased access to the South American market for German car makers.
Those groups have called on EU politicians to reject the deal with Mercosur.
O’Brien concedes the deal could heap more pressure on EU negotiators to close the door on any further opening of its domestic beef market to imported competition.
At the same time, the EU’s negotiators have long held the prospects of a deal with Mercosur over their NZ counterparts’ heads when it came to their demands for better beef market access.
The argument from the EU is that it is constrained in the amount of quota it can create without flooding its market with imports and driving its farmers into bankruptcy.
The EU has argued that if it allows the creation of the 300,000 tonnes of quota demanded at times by Mercosur it would have left no room to offer NZ producers anything at all.
O’Brien says that argument is now no longer relevant.
“Previously their negotiators were holding the fact that negotiations had not been concluded with Mercosur over our heads.
“To that extent things have changed because it has crystalised a certain number,” he said.
Northland beef farmer and former Trade Minister Lockwood Smith agrees there is now one less excuse available to the EU for keeping beef market access off the table in talks with NZ.
“It is a valid argument that now that Mercosur is finalised at least they know what that is and they can’t say we do not know much we are going to give to them so we have got to be extra careful with you, NZ.”
Smith said the Mercosur deal also set another precedent useful to NZ in its talks with the EU.
“It is encouraging that they have shown they are prepared to move … it would be most unusual for them now to refuse to make some provision (for improved market access) for us.”
Trade officials from the EU and NZ will meet again later this month for the fifth round of negotiations.
The EU is yet to make an offer of improved market access to either beef or dairy products from NZ in a year of talks.
