For many years Irish trade policy has been based on trying to ride two horses at once – open up opportunities for Irish businesses, or more accurately businesses based here, and protect the farmers. Every country fights its own corner in trade matters, of course, and most countries have vulnerable sectors they want to shelter. But few lobbyists have been as persistent as the Irish farmers, who for many years had an alliance with their French counterparts in arguing that the European Union – which negotiates trade deals on our behalf – take due heed of the exposure of their industry.
The farm and beef lobbies shaped the agenda in the wake of the draft deal between the EU and the Mercosur countries – and soon had Minister for Agriculture Michael Creed dancing to their tune. Interestingly, French agriculture minister Didier Guillaume has played the same card, telling the French parliament that he "will not be the minister who sacrifices French agriculture at the altar of an international agreement". So this is far from a done deal.
New opportunities
But for Ireland the debate needs to reflect the fact that this is not all about agriculture. The deal, if it goes through, opens up new opportunities for other sectors here, notably drinks, pharmaceuticals, medical devices, parts of the engineering sector and dairy.
Tariffs, or special import taxes, which Irish-based businesses have faced in selling into these markets will be cut, other barriers reduced and legal protections put in place. It is also, just as importantly, a step forward in the free-trade agenda which has been a key foundation stone to our increasing prosperity as a country. At a time when US president Donald Trump’s trade skirmishes and Brexit are on the horizon, free trade can no longer be taken for granted.
The gradual dismantling of international trade barriers via series of multilateral deals from the 1960s on was far from a perfect process. There is legitimate debate about its impact on some developing countries and more recent questions about how the gains are spread across society. But is has underpinned the transformation of the Irish economy – and lifted the fortunes of many other countries. At a time when free trade is facing challenges unprecedented in modern times, the Mercosur deal pushes back against this dangerous trend.
This is not to underplay the problems of the beef sector. But they are mostly unrelated to a deal which opens up an additional 1.25 per cent of the EU beef market and is likely to take four or five years to ratify, if this even happens.
Beef farmers face a squeeze in prices and the looming threat of a no-deal Brexit as well as longer-term environmental challenges. Strange to be kicking up so loudly about something which might happen in the mid-2020s, when in three and a half months the sector could be hit by unprecedented disruption, which would require swift Government action.
Farming has framed so much of the trade debate here over the years because its representatives work at it and the sector’s story is straightforward and understandable. Beef or dairy prices and food safety are clear topics, and resonate particularly in rural Ireland, even as the sector has become a smaller part of our economy. A tariff reduction which might allow an engineering company to sell into a new market is a less compelling story. Yet farmers have benefited from free trade too – just look at the cheques many received from big co-ops such as Kerry, based on their success in spinning off businesses in the international marketplace.
By their nature, the benefits of trade deals are spread widely, while the pain can be more concentrated. Yet ministers will know that they let the farmers make the early running on this – and were slow out of the blocks to put any positives forward. Or perhaps they didn’t want to take on the farm lobby. Business groups also missed the initial window, so vital in framing the political debate.
I don't know how exactly the pluses and minuses will add up in the Government report. Activity in farming and food does have a bigger payback to the national economy – euro for euro – than, say, exports from the pharma sectors. But given the limits and volume controls on beef exports from big players such as Argentina and Brazil under the proposed deal – and the range of opportunities in other sectors – I would bet on a positive assessment.
Such calculations are very hard to make with any level of accuracy, but for a small, open economy, freer trade is broadly a positive. Sectors which are hit have a call to be compensated. However, the beef sector may need assistance much more urgently if a no-deal Brexit comes to pass, even if the precise shape this would take remains unclear.
Trade threats
Brexit and Trump's trade threats are real and present dangers to the free-trade agenda which has benefited us so much. This week the US president published a new list of proposed tariffs on EU exports as part of an ongoing trade row where Trump is looking for concessions from Europe. Ibec economist Gerard Brady calculates that Ireland is the most exposed EU country on this list, largely due to whiskey being targeted but also other sectors such as cheese. A few weeks after sampling Irish hospitality, the US president has singled us out for special treatment. A point to be made when vice-president Mike Pence comes in the autumn.
For years, trade barriers were gradually coming down, greatly to Ireland’s benefit. Now we are in a new era when this is under threat, breeding danger and uncertainty. So when the opportunity of a new deal, like the one with the Mercosur countries comes along, we just can’t afford to turn it down.