Mercosur deal could have implications for US negotiations says AHDB Pork

The Mercosur trade offer, which is currently being debated in Brussels, could open the EU market to an increased level of imports from South America, according to AHDB Pork.

Based on indications that EU negotiators are preparing to offer some South American countries import quotas for selected agricultural products, AHDB Pork believes there could be an increase in pork imports, although probably at a low level. Potentially more significant, however, could be the prospect of the Mercosur deal setting a precedent for the continuing trade negotiations with the United States.

“A draft of the EU’s offer to Mercosur, due to be tabled next month, reportedly includes an offer of a tariff rate quota for pork,” said AHDB Pork.  “This would allow the Mercosur countries to supply 3,000 tonnes of prime pork cuts and 9,250 tonnes of lower quality pork to the EU, provided it was Ractopamine-free. This would be subject to a €83/tonne levy but this is well below current tariffs, which range from €467 to €869 per tonne, depending on the cut involved.

“The offer is part of the reopened negotiations with Mercosur, a block of five countries established in 1991, which covers Argentina, Brazil, Paraguay, Uruguay and Venezuela. Negotiations over a Free Trade Agreement (FTA) between Mercosur and the EU had been stalled for some time but the election of a new government in Argentina at the end of last year has allowed them to recommence. Among the Mercosur countries, only Brazil is a significant pork exporter.”

AHDB Pork added that, if fully utilised, the new quota would more than double EU pork imports, which totalled just 8,000 tonnes in 2015.

“However, the quantities involved are small relative to overall EU supply levels, so would probably have little impact on the market,” said AHDB Pork.

“Nevertheless, there may be some concern that the offer to Mercosur could set a precedent for negotiations with the United States over the Transatlantic Trade & Investment Partnership. The US is a much larger pork exporter than Brazil and would like access to the EU market. At the moment, there are no clear indications of what the EU might be prepared to offer the US.”

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