Prospect of EU trade agreement with New Zealand worries dairy farmers

The threat of EU trade agreements harming Ireland’s main farming sectors has doubled, with negotiations with New Zealand moving forward rapidly.

Up to now, the EU being swamped by beef from South America was the main fear for farmers, but New Zealand is the world’s largest exporter of butter, is second only to the EU in cheese exports, and is by far the largest exporter of dry milk powders.

How the Irish dairy industry would be affected in a trade agreement is an understandable worry for farmers, with the fourth round of trade talks due in Wellington, New Zealand, in mid-May, following exchange of market access offers in February for all but sensitive sectors (which include dairy, beef and sheepmeat).

Irish dairy industry representatives were told at a recent EU Commission Civil Dialogue Group meeting on international aspects of agriculture by EU trade official John Clarke that the EU will implement measures to protect its dairy sector, and will not liberalise the EU’s butter or milk powder markets, within any trade agreement with New Zealand, instead limiting it through a tariff rate quota.

New Zealand is one of several trading partners the EU is looking for closer ties with.

Trade agreements have helped its food industry reach new export markets.

In January 2019, EU agri-food exports increased for the fourth year in a row, reaching a record monthly level of €11.2 billion, driven to a great extent by increased exports of milk powders (up €58 million).

But trade agreements could make life difficult for EU farmers, especially in Ireland, where IFA Livestock Chairman Angus Woods recently called for beef to be excluded from the Mercosur trade negotiations with South American countries, and for the EU Commission to instead restrict beef imports, in order to improve the current EU beef market situation.

The EU imports about 330,000 tonnes of beef annually, of which about 75% comes from the Mercosur countries.

The next round of EU-Mercosur trade negotiations will be in May or June, but significant further progress is not expected, as no credible dairy market access offer has been made, said ICOS European Affairs Executive Alison Graham, who attended the recent EU Commission DG AGRI Civil Dialogue Group on international aspects of agriculture.

EU-Mercosur negotiations resumed in Buenos Aires in mid-March, without an announcement of any major breakthroughs, due to negotiating sensitivities in relation to Mercosur beef access to the EU market, cars, rules of origin, geographical indications, maritime services, and EU dairy access to the Mercosur market.

Ms Graham said another key point from the Civil Dialogue Group meeting was that not much progress has been made in EU-Indonesia trade negotiations, due to negotiations being complicated by recent developments in the EU with regard to exclusion of palm oil from the biofuels sector.

Indonesia is a priority market target for Ireland, with Agriculture Minister Michael Creed having led the first Irish trade mission to Indonesia, and Malaysia, last November, to raise awareness of Ireland as a source of sustainable dairy for these countries.

Agriculture Minister Michael Creed.

The prospects of trading to Singapore are better, with Geographical Indications (which protect the market position of unique EU foods) the only remaining outstanding issue in trade talks with the Southeast Asian city-state.

Alison Graham reported that EU trade negotiations with Australia are progressing slowly, due to elections in Australia in May.

Market access offers have not yet been exchanged.

The negotiation teams are due to meet for a fourth round of talks in the first week of July.

Meanwhile, benefits are flowing for the EU food industry from the trade agreement with Japan. The main early beneficiaries are producers of European wine, with tariffs on their exports cut from 15% to zero.

In the trade agreement with Canada, the Canadian authorities have agreed to conduct a review of its tariff rate quotas in 2019, as a result of EU complaints regarding EU cheese exports to Canada.

Meanwhile, the agri-trade implications of Brexit still overhang Ireland’s agri-food sector, with October 31 the main new Brexit deadline.

However, if the UK does not hold European Parliament elections in May, it will leave the EU on June 1, with or without a deal.


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