THE National Farmers Federation is concerned that the European Union’s latest farmer subsidies worth almost $80 billion, brought forward to sign a trade deal with South American countries, will further unbalance international trade scales.

European leaders voted over the weekend to authorise the signature of the EU-Mercosur Partnership Agreement, following an offer on agricultural subsidies by the European Commission. Mercosur comprises Argentina, Brazil, Paraguay, and Uruguay.

The deal was 26 years in the making, having started in 1999. It will gradually eliminate tariffs on more than 90pc of bilateral trade between the two regions. 

The most contentious elements of the deal were  trade-related. For many EU industries, it is a clear win, removing steep tariffs on EU exports – including duties of up to 35pc on car parts and alcoholic drinks – and dismantles other trade barriers. But in return, the EU has granted concessions to Argentina and Brazil – two agricultural heavyweights – allowing duty-free quotas for beef, poultry and other environmentally ‘sensitive’ products including sugar, rice and honey. 

European farmers and EU agriculture ministers have pushed for stronger safeguards and reciprocity in the deal over the past few years. Irish farmers have been especially vocal in their opposition, warning that the deal could allow an additional 99,000 tonnes of low-cost beef to enter the EU market, disrupting Ireland’s farming sector.

NFF president Hamish McIntyre described it as a material development that sets a worrying precedent.

“While the NFF welcomes more global trade, it is understood that the passing of the vote only came about following an agreement to bring forward nearly $80 billion (AUD) in subsidies to their agricultural sector,” Mr McIntyre said.

“Bringing forward enormous EU subsidies to pass a trade deal with the South American countries raises concerns for Australian farmers.

“As negotiations for our own free trade agreement with the EU continue, the NFF is worried the EU will continue to offer sub-par access for Australian producers, and could deploy more billion-dollar subsidies to their producers.

Production-distorting subsidies

“Such an advancement of billions in production-distorting subsidies only increases the uneven playing field between Australian producers and their European counterparts, putting Australian farmers at a huge competitive disadvantage,” Mr McIntyre said.

“Australian farmers are among the least subsidised in the world and embrace free markets and trade to drive productivity, sustainability and food security outcomes.

“The EU’s decision is also worrying from an environmental standpoint – recent research by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) found subsidies, such as those provided for by the EU Common Agricultural Policy, can lead to significant negative environmental outcomes.

“We are calling on the Australian Government to directly raise these concerns with their European counterparts and again reject any trade deal that does not provide significantly increased access for our red meat, dairy, sugar, and rice producers,” Mr McIntyre said.

Source: NFF