March 5, 2011

EU-Mercosur pact may cost EU beef industry US$35 billion

It is estimated that any liberalisation of trade between the EU and the Latin American trade bloc Mercosur could result in up to EUR25 billion (US$35 billion) in losses for EU's beef sector.

EU and South-American trade officials are due to meet for negotiations in March in a bid to breathe fresh life into bilateral free trade negotiations that first began more than 15 years ago but were suspended in 2004.

Officals hope a new agreement would generate an extra EUR4.5 billion (US$6.3 billion) in EU exports to the rapidly-expanding Mercosur market and increase cooperation between the two trade blocs.

However, a new study by EU agricultural lobby groups Copa-Cogeca says the trade balance remains firmly in Mercosur's favour. "If trade is fully liberalised between the two sides, it is estimated to result in losses to the EU beef sector of as much as EUR25 billion (US$35 billion)," the leaders of the group said in a letter to EU agriculture Commissioner Dacian Ciolos.

Although trade between the two blocs is valued at around EUR60 billion (US$84 billion), the study says Mercosur's exports to the EU have risen from EUR32 billion (US$45 billion) to more than EUR43 billion (US$60 billion) while the EU's exports to Mercosur have fallen from EUR36 billion (US$50 billion) to EUR32 billion (US$45 billion).

While the EU already imports 20% of all foodstuffs and 80% of beef from Mercosur, Copa-Cogeca claims any increase would make the bloc more dependent on imports at a time when food security concerns are a priority.

"We will become more dependent on imports and the EUs' food security will be increasingly affected by climatic conditions or political decisions on agriculture from these countries," the press release on the report said.