Michael Creed (Cork North West, Fine Gael) | Oireachtas source

I thank the committee for the opportunity to address it today on developments relating to the EU and specifically the future of the Common Agricultural Policy, Brexit and Mercosur. The committee will recall that my Department briefed it on CAP and Mercosur late last year. I will endeavour to avoid going over old ground and brief the Committee on the current state of play on each of these issues.

I will begin with the reflection on the post 2020 Common Agricultural Policy, which is currently under way at EU level. Members will be aware that the EU Commission, through DG Agri, intends to publish legislative proposals on a new policy in June of this year. This is intended to follow in a logical sequence proposals from DG Budget on a multi-annual financial framework. These are to be published in May 2018. The Minister for Finance takes the lead on this issue. That framework will establish the maximum annual ceilings within which annual EU budgets will be negotiated in the period 2020-2027.

There will be obvious pressures on the CAP budget in the next financial period. These result not only from the departure of one of the largest net contributors from the EU, but also from new and very real political imperatives such as migration and defence. I want to make one thing clear. Ireland has been, and will continue to be, a defender of the CAP budget. In his speech to the European Parliament the Taoiseach made it clear that Ireland is prepared to make additional contributions to the EU budget, but only if these are to be used to fund “things that contribute to the advancement of the European ideal”. The Common Agricultural Policy, as established by the treaties, is a core policy of the European Union and is at the heart of the European ideal. Not all member states feel the same, however. At this stage, the Netherlands, Denmark, Austria and Sweden have indicated that they are not prepared to make additional contributions. Commissioner Oettinger has indicated to the finance committee of this House that he anticipates a cut of between 5% and 10% in the CAP budget, against a background where some member states are seeking a 30% cut. So there will be some tough negotiations ahead.

Moving to the likely shape of any future Common Agricultural Policy, the members have already been briefed on the broad shape of the Commission communication published in November 2017. Key themes include: more discretion for member states, simplification, continued support for farm incomes, a greater focus on the environment and climate change, new options for risk management, and encouragement for generational renewal. My Department ran a public consultation from 26 January to 23 March. This included six public meetings held throughout the country during the month of February. The venues were Carlow, Charleville, Navan, Athlone, Claremorris and Carrick-on-Shannon. I attended three of these meetings and the Minister of State, Deputy Andrew Doyle, attended the other three. These meetings were instructive and while attendees were universally supportive of a strong CAP budget, there were, as might be expected, a variety of views on the more difficult issues such as the distribution of direct payments, the definition of active farmer and the means by which farmers should be compensated for their environmental contribution. These are matters with which we will have to grapple in the context of any new CAP. The aim of this exercise was to hear the views of citizens on what is a strategically important policy for Ireland. Approximately 150 written submissions have been received and these will help to inform Ireland’s position in the upcoming negotiations. My Department is currently analysing the submissions and will produce a summary report in due course, which I will be happy to publish.

There has been significant progress in relation to Brexit since the joint declaration late last year, but there is much more to do. Negotiators have reached agreement on most elements of the withdrawal agreement, including elements of the draft protocol on Ireland-Northern Ireland, which relate to the common travel area and North-South co-operation. They are also ad idemon the need for the final agreement to include text which gives legal effect to the commitments made on Northern Ireland. This commitment to avoiding a hard border between Ireland and Northern Ireland is critically important. Ireland has the full support of EU member state colleagues in this objective. Prime Minister May wrote to President Tusk on 19 March to restate her solemn commitment to all the undertakings given by the UK in December’s joint report. This includes an explicit commitment “to agreeing, in the withdrawal agreement, operational legal text for at least the so called backstop option, set out in the joint report”. This backstop requires the UK to maintain “full alignment with those rules of the internal market and the customs union which now, or in the future, support North-South co-operation, the all island economy and the protection of the 1998 agreement.” This kind of alignment is a prerequisite for trade to continue as at present. Of course, if the UK can develop alternative proposals, that is fine too, and the negotiating guidelines provide for such a development. Any such proposals must respect the Single Market and the customs union. The EU and the UK have agreed on a detailed agenda for discussions over the coming weeks to finalise this text. As part of the withdrawal agreement, a text on a transition, which will apply to 31 December 2020, has also been agreed. This will provide much needed certainty to people in the agrifood business who are trying to prepare for Brexit. The commitment to full application of the EU acquisduring transition means that food business operators, including farmers, can be confident that the UK’s regulatory environment will remain the same as that of the EU during transition. This is critically important for the continuation of trade in agrifood products on the basis of current arrangements. During transition, the UK will remain bound by EU regulation, while in general having no role in the institutional legislative arrangements. On fisheries, the Common Fisheries Policy, existing reciprocal access and quota sharing arrangements, will continue to apply in full during transition, although the UK will have a consultative role only. This is a critically important element in the agreement and has been widely welcomed by the industry here. The EU Council has also agreed guidelines for the negotiation of the framework for the future relationship. Once we are through transition, our objective will be to have as close a trading relationship as possible with the EU, while respecting the integrity of the Single Market. These guidelines will be presented to the UK in the essential principles papers, on the basis of positions put forward by the task force. Based on UK red lines, the negotiating guidelines indicate that the objective of the negotiation will be a free trade agreement, with zero tariffs and no quantitative restrictions. On the basis of her recent Mansion House speech, this objective would appear to be shared by Prime Minister May. This is critically important for trade in agrifood products because these are the products that attract the highest tariff rates.

On fisheries, the guidelines clearly state that in the overall context of the free trade agreement reciprocal access to fishing waters and resources should be maintained. This is also extremely important. The guidelines also refer to customs co-operation and the application of sanitary and phyto sanitary disciplines. These are necessary controls, but have the potential to cause friction at borders, so we will be keeping a very close eye on these elements of the negotiation. There are still a significant number of moving parts in this negotiation. The timeline is extremely challenging. Nonetheless, progress has been made in a number of areas which are critically important to the agrifood sector in Ireland. EU-UK negotiations on both the withdrawal agreement and future relationship framework aim to conclude by October 2018, so that they can be referred to the European Parliament, member states and the UK Parliament for ratification before exit day on 30 March 2019.

I would like to turn briefly to the negotiations between the EU and Mercosur countries on a possible trade deal. My colleague, the Minister for Business, Enterprise and Innovation, Deputy Humphreys, has primary responsibility for bilateral and multilateral trade deals, but of course our Departments collaborate closely on trade issues of relevance to the agrifood sector. I must begin by saying that as a general proposition Ireland is pro-trade. Ireland has a small open economy, among the most open in the world. Trade is our lifeblood, particularly in the agrifood sector, with over 80% of output exported. We are supportive of trade deals, provided they are balanced and provided our most vulnerable sectors are protected. From the very beginning of discussions on a trade deal with Mercosur, however, Ireland has articulated concerns about the potential impact on sensitive sectors and, in particular, on the beef sector. These concerns related to the size of any tariff rate quota for beef and its composition. Additional volumes of beef imported from Mercosur countries at preferential tariff rates, are likely to exert downward pressure on beef prices given that the EU market is at present more or less in balance and that consumer demand for beef is in decline. The specific tariff rates and the extent to which any quota is segmented, for example, between high quality and manufacturing beef, would be significant determinants of the degree of negative impact on target markets for Irish beef. Ireland has continued to engage with the Commission and with other member states at the highest level to ensure that the European beef sector is protected. Our officials continue to make strong interventions at the trade policy committee, I have made a number of interventions at the Agriculture and Fisheries Council and, as recently as 20 March, the Taoiseach wrote to the President of the Commission, Mr. Jean-Claude Juncker, outlining Ireland’s serious concerns. I understand that the latest round of negotiations took place between officials in Asuncion between 21 February and 2 March, but that there are still a considerable number of issues in play, including Mercosur offers on dairy, ethanol, car parts and geographical indicators. I can assure the committee that I will continue to act to protect the best interests of Europe’s beef industry as these negotiations play out.