Michael Fitzmaurice warns Mercosur deal risks Irish farmers
Michael Fitzmaurice spoke in parliament opposing the Mercosur trade deal, arguing it would not provide a level playing field for Irish farmers and that its safeguards are inadequate. He said low audit rates, tariff changes and the proposed 10% safeguard threshold could leave domestic producers exposed to increased imports.
Michael Fitzmaurice said Irish animal welfare and regulatory standards differ greatly from those in Mercosur countries such as Brazil, and therefore the deal does not create fair competition. He questioned inspection coverage for Irish farms, suggesting audits might amount to only around 1-2% of roughly 130,000 farmers, and warned that Mercosur audits would be minimal by comparison.
He criticised the proposed safeguard trigger that requires a 10% fall in imports and a 10% price gap to allow provisional measures, noting that repeated 9% changes over five years could cumulatively amount to 45% with no automatic relief. He raised uncertainty about whether percentages are treated cumulatively or yearly and said the backstop as drafted could fail to protect domestic prices.
Michael Fitzmaurice outlined concerns that tariff reductions would apply to a large tonnage over a six-year period, which he said would effectively lower tariffs on roughly 99,000 tonnes and increase total imports from an estimated 200,000 tonnes to about 253,000 tonnes. He argued the economic modelling assumes existing volumes benefit from reduced tariffs and that South American exporters would gain from the changes.
He said the Commission’s proposal to split the agreement into trade and non-trade elements would leave trade measures to be adopted by qualified majority in the Trade Council and then by a simple majority in the European Parliament, limiting national parliaments’ direct votes on trade elements. He noted CETA as a precedent for provisional trade adoption and argued that the European Parliament could be the key point where the deal is challenged, while a Council blocking minority would require at least four member states representing over 35% of the EU.
Level playing field concerns
Michael Fitzmaurice said Irish animal welfare and regulatory standards differ greatly from those in Mercosur countries such as Brazil, and therefore the deal does not create fair competition. He questioned inspection coverage for Irish farms, suggesting audits might amount to only around 1-2% of roughly 130,000 farmers, and warned that Mercosur audits would be minimal by comparison.
Safeguards and threshold mechanics
He criticised the proposed safeguard trigger that requires a 10% fall in imports and a 10% price gap to allow provisional measures, noting that repeated 9% changes over five years could cumulatively amount to 45% with no automatic relief. He raised uncertainty about whether percentages are treated cumulatively or yearly and said the backstop as drafted could fail to protect domestic prices.
Tariff changes and import volumes
Michael Fitzmaurice outlined concerns that tariff reductions would apply to a large tonnage over a six-year period, which he said would effectively lower tariffs on roughly 99,000 tonnes and increase total imports from an estimated 200,000 tonnes to about 253,000 tonnes. He argued the economic modelling assumes existing volumes benefit from reduced tariffs and that South American exporters would gain from the changes.
Ratification route and institutional questions
He said the Commission’s proposal to split the agreement into trade and non-trade elements would leave trade measures to be adopted by qualified majority in the Trade Council and then by a simple majority in the European Parliament, limiting national parliaments’ direct votes on trade elements. He noted CETA as a precedent for provisional trade adoption and argued that the European Parliament could be the key point where the deal is challenged, while a Council blocking minority would require at least four member states representing over 35% of the EU.
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Transcript
You're new, you have a tough job coming up ahead between all the different things, but look at your well-seasoned edge that you know the job inside out, so the best to look. In the line of Marcus, first of all, I want to say I'm opposed to it, unlike Paul, for the simple reason, even if you look at the backstops that's being put into it, the so-called, you know, cushions, the first thing is we're not on a level playing field with the way an Irish farmer has to adhere to both, basically, animal welfare and the different regulations, EU regulations, compared with what they do in Brazil and all the other countries. It's a totally different ballgame, so let no one go telling me that it's a level playing field. Just for the sake of, just to know, in Ireland, with the cap, Sinead, what, you know, you talk about EU inspections, what percentage of audit do you get, roughly, in the overall 130,000 farmers? I couldn't put a figure on as a deputy, but I'll follow up. I'd imagine to be 1% or 2%, and when we go talking about Brazil being audited, they'll hardly, you know, it's going to be like a fly in a wall, to be quite frank about it. It's going to be, you know, very minimum. And in the line of the backstop, I'm totally correct in saying that they're talking about, basically, 10% dropping in European meat prices before they put a break on it. But my understanding, and correct me if I'm wrong on this, that if it was 9% for five years in a row, the backstop doesn't, or the break doesn't stop. Is that correct? I think you are correct. Is there something? Yes. Yes. So just to fill you in on that, deputy. So the proposal is for enhanced monitoring and reporting of imports, allowing for quick adoption of provisional safeguard measures in urgent cases, and to enable the launch of investigations where imports decrease, increase, sorry, from Mercosur by at least 10% and import prices are at least 10% lower than domestic prices. Yeah. So 9% can be for five years in a row, which is 45%, and there's nothing we can do about it, to put it simple. I'm not sure about whether that's cumulative or not. You might understand that it's yearly. Yeah. On the price. The second, the tonnage that's coming in at the moment with the tariff that's on it, I'm correct in saying then that tariff would be lowered completely, along with the 50,000 extra tons. So the tariff would be lowered for 99,000 tons over a six-year period. So I think I could be wrong, and we'll check this, but I think at the moment about 200,000 tons is coming in in most years from Mercosur countries. And where the 55,000 tons comes from is that the economic modelling assumption is that you continue to have your 200,000 tons coming in, and rather than that increasing by 99,000 tons, it increases by 53,000 tons, roughly. So, in other words, the South American exporters get a benefit from the reduced tariff on the 200,000 tons, and they increase. So you get 253,000 tons of total exports rather than 200,000 tons. In relation to the Mercosur deal, and in fairness to you in the department, and you'd be tic-tac-ing with Europe, would you imagine that it's going to be down to a vote in the parliament and the council of ministers that the way it's looking at the moment, to call it out straight, is that my reading is that if France gets more money, Italy will throw in the towel, and the veto is gone with Lisbon Treaty and all of that. So the council of ministers looks like to go through there, and that the only hope that Irish people have is of blocking it, or the only hope for Ireland, is through the European Parliament. Would that be fair to say? So the Commission's recent proposal gives some clarity on the legal approach that they are taking to the agreement. So they foresee a split agreement whereby the trade elements... And I'm just sorry for interrupting you, but I'm correct in saying that by doing that split, they have now eliminated the national parliaments from having a vote. On the trade elements. So they've taken out the trade elements and split those. So the trade elements require adoption by qualified majority vote in the Trade Council and then by a simple majority vote in the European Parliament. And when you were tic-tac-ing with them over there, who's allowing them to split this deal? Is there not a council of ministers that blocks them, or is it van der Leyen, or is it the Commissioner, or who? The Commission have the power to propose legislation, so they have the right to propose how they would go about adopting... So it's unelected bureaucrats that has proposed this, is it? Well, the Commission have competence, they have competence for trade matters, and then obviously there's joint competence. But they're not the MPs, right? No, but I suppose in relation to competence, Deputy, there is legislation governing whether competence is a matter for the Commission, in some cases for the Commission and Council in other cases. So a lot of issues would be joint competence, but trade is exclusive EU competence, or EU Commission competence. So therefore, if it's exclusively the trade elements of the deal, the Commission have the power to propose that it is ratified. Have you ever seen this done before, Schnitt? Now, I will check in relation to, so CETA, as we were talking about the Canadian deal, that was done as it was a provisional agreement only on the trade elements of CETA. Because as you know, the full CETA has not yet been ratified by Member State Parliaments, so it's not unprecedented, definitely. So just to explain, there will be a QMV, a qualified majority vote at the Trade Council, and then a simple majority... What does that mean? Is that the Ministers? That is the Ministers. That would be Trade Ministers, so in our case, the Thaunisla. Right. For that QMV vote, a blocking minority would be required to prevent adoption of the agreement by the Council of Trade Ministers, and that requires at least four Member States, representing over 35% of the EU population, either voting against or abstaining on the proposal. Voting against or abstaining? Voting against or abstaining, yeah. Right. So that's the only... It's either that, or then it goes to the Parliament, isn't that it? Parliament is a simple majority vote, yes or no, yes. Okay. Thank you. Deputy Art? Yeah.