Aindrias Moynihan (Cork North-West, Fianna Fail)
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Before we begin, I wish to bring to the committee's attention that witnesses giving evidence within the parliamentary precinct are protected by absolute privilege in respect of the evidence they give to the committee. This means a witness has full defence in any defamation action of anything said at a committee meeting. However, witnesses are expected not to abuse this privilege and may be directed to cease giving evidence on an issue at the Chair's discretion. Witnesses should follow the direction of the Chair in this regard and are reminded of the long-standing parliamentary practice to the effect that, as is reasonable, no adverse commentary should be made against an identifiable third person or entity.

Witnesses giving evidence from a location outside the parliamentary precinct should note they may not benefit from the same level of immunity from legal proceedings as witnesses giving evidence from within the parliamentary precinct and may consider it appropriate to take legal advice on the matter. Privilege against defamation does not apply to the publication by witnesses outside of the proceedings held by the committee of any matter arising from the proceedings.

The agenda for this session is to examine the impacts of trade deals on agriculture, such as Mercosur - the EU trade agreement - and US tariffs. The joint committee will hear from the following officials from the Department of Agriculture, Food and the Marine: Ms Sinéad McPhillips, assistant secretary, EU, UK and international affairs; Mr. Paul Whelan, assistant principal, UK and international trade division; and Ms Margaret O'Boyle, assistant principal, EU and international trade division.

Before we proceed, on behalf of the committee and myself, I extend congratulations to Ms McPhillips on her promotion to the position of Secretary General in the Department. We look forward to engagement with her and with her officials. Tá fáilte romhaibh agus comhghairdeas as an ról nua. The opening statements have been circulated to committee members and I will allow five minutes if Ms McPhillips wishes to read it into the record or two minutes if she wishes to give a brief synopsis. We will then move onto questions and answers.

Ms Sinéad McPhillips:

My appointment does not take place until next week, so I am here in my current role. I thank the committee for the opportunity to discuss the impacts of trade deals on the agrifood sector. The agrifood sector has a strong export focus, and it benefits significantly from good two-way trading relationships with other countries, as well as from the EU’s Single Market. Last year, agrifood exports were a record €19 billion, to over 180 countries.

Our exports have increased by almost two-thirds in value over the past decade. That increase was driven more by increasing value rather than volume. Our export markets are reasonably well balanced between the UK, at 38% of export value, and EU markets, at 34%, while international markets outside of Europe account for the remaining 28%. Our membership of the EU means that we are part of a growing network of EU free-trade agreements. This presents new opportunities, for example, Irish agrifood exports to Japan have doubled since the implementation of the EU-Japan free trade agreement, to €172 million in 2024.

However, it is important that such agreements also take account of sectors which may be vulnerable to increased imports into the EU. The EU-Mercosur agreement is one where concerns have consistently been raised on its impact on the agrifood sector in Ireland, particularly in relation to the beef sector. The committee will be familiar with the programme for Government commitment to work with like-minded EU countries to stand up for Irish farmers and defend our interests in opposing the current Mercosur trade deal. The recent announcement from the Commission of its proposed approach to ratification of the agreement includes a number of measures which look at reinforcing safeguards on sensitive agricultural products, increasing the number of sanitary and phytosanitary, SPS, checks in third countries and strengthening controls, measures relating to production standards and supports for farmers who may be negatively impacted. Our Department is working with the Department of Foreign Affairs and Trade, which has lead responsibility for trade policy, to examine the detail of these proposals. The Minister, Deputy Heydon, has in the meantime engaged regularly with his counterparts from other EU member states to discuss common areas of concern in relation to Mercosur, including a meeting with his French counterpart in Brussels earlier this week.

In regard to EU-US trade relations, the US is the second-largest market for Irish agrifood exports. Last year, exports to the US were valued at almost €2 billion. Therefore, the trade tensions this year have created challenges for our agrifood sector. In August we saw the EU and US agree a joint statement on transatlantic trade and investment. The statement confirms that a tariff ceiling of 15% will now apply on the majority of goods exported from the EU to the US, with the exception of where the pre-existing most-favoured nation, MFN, tariff rate is higher. This can be seen as a positive outcome for agrifood exports which had higher pre-existing tariff rates, as from 2 April onwards they will be back in the same position they were in before the tariff announcements. For example, butter exports will revert to the pre-existing tariff rate of 16% which was in place before April, having faced a 26% tariff between April and August. The new 15% tariff rate poses major challenges for exports that had lower pre-existing tariff rates. For example, our spirits sector will face a 15% tariff for exports to the US following years of EU and US exporters enjoying a mutually beneficial zero-for-zero tariff arrangement. The EU and the US have committed to work on expanding a list of exemptions included in the joint statement. Obviously, we would like to see spirit drinks included in this.

In relation to the UK, Ireland's main trading partner for agrifood products remains the United Kingdom. In May this year the EU-UK summit produced a commitment on both sides to work towards an SPS agreement, as well as securing an important agreement to extend the current arrangements for fisheries until June 2038. The commitment to establish a common SPS area is to be based on dynamic alignment by the UK with all EU rules. A comprehensive SPS agreement would significantly reduce the administrative on Irish agrifood businesses trading with Great Britain, potentially eliminating the need for export certification and for import controls at ports for most products.

The EU's negotiating mandate is currently being finalised and my Department will monitor these negotiations closely once they formally commence. Of course, the EU has many other free trade agreements in place or under negotiation with third countries. We will be happy to discuss those also.

Aindrias Moynihan (Cork North-West, Fianna Fail)
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There will be six or seven minutes each, which will gives us an opportunity to do another round if we need it. I call Senator Paul Daly.

Paul Daly (Fianna Fail)
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I welcome the officials this evening. I want to be associated with the congratulations to Ms McPhillips. I wish her the best of luck going forward and look forward to working with her.

It is likely that Mercosur will dominate proceedings here this evening. I will start there also. I am not opposed to Mercosur. I am not opposed to any trade deal. We are an open economy and Ms McPhillips rightly said how much we need to do free trade with as many people as possible. However, I am also a beef farmer and I have problems with the beef sector of the Mercosur agreement. I have more of a problem with the standards to which beef is produced than I have with anything else. We have to have an equivalence of standards. I would like to hear Ms McPhillips's comment on that. Can Ms McPhillips give us an indication, because we all get carried away on the beef side, of what the Mercosur deal might be worth to our agriculture sector, aside from beef? There are massive positives for our dairy sector. Our spirits sector, as she mentioned, might struggle in America with a 15% tariff. There is a massive opportunity there which would in turn be a benefit to our tillage sector in the production of malt, barley, etc. Has Ms McPhillips any idea of what Mercosur might be worth, on the positive side, to the other sectors? Will she also comment on the equivalence of standards of production of beef to give us a better idea of that? In doing so, she might give us an indication as to what the EU-Canada Comprehensive Economic and Trade Agreement, CETA, is worth to agriculture. It had the same objections. I do not want to use the word "scare-mongering" but, because I cannot think of an equivalent, I will use it to explain what I mean. At the time, CETA was not acceptable at all. What is it worth to us now, having been accepted? Is there any progress on a carve-out for the spirits? I am from Kilbeggan, the home of Kilbeggan whiskey, so I have a keen interest in the American tariffs on whiskey. Is there any progress or update on the potential carve-out of spirits to a zero tariff?

Ms Sinéad McPhillips:

Obviously there is concern about the impact on the beef sector and that has been the position of this Government and the previous Government for many years. The 99,000 tonne beef quota for the Mercosur countries was agreed in 2019. That has not changed.

Paul Daly (Fianna Fail)
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That is prime cuts, though. It is not just 99,000 tonnes of beef.

Ms Sinéad McPhillips:

It is divided between prime cuts and lesser cuts. However, assuming the additional imports are in the high-end cuts, an economic analysis was carried out, commissioned by the Department of Enterprise, Trade and Employment in 2021, which forecast that beef imports from Mercosur to the EU as a whole would increase by around 53,000 tonnes as a result of the agreement. It is important to acknowledge that there are existing imports from Mercosur countries that are facing a tariff at the moment. They would benefit from the reduced tariff arrangements being phased in over a six-year period. The net result was estimated to be that imports would increase by 53,000 tonnes and the impact of the additional imports on Ireland, assuming they were high-end cuts, would be that producer returns in Ireland could fall by around 2%, which at the time was estimated as between €44 million and €55 million of an impact on beef sector incomes. That is a serious concern.

The other side of it, which the Senator alluded to, is the standards to which farmers are held in Mercosur countries as opposed to in the EU. As we understand it, two separate sets of standards are being talked about. SPS standards are non-negotiable. They relate to food safety and animal and plant health standards that apply equally to EU production and to imports from all around the world. In its recent proposal the Commission has committed to stepping up the audits and inspections in third countries to ensure that those standards are upheld. There is no change in standards and no difference in standards, however. The other standards are the standards of production, the sustainability standards that our farmers are held to in terms of their production and how they farm.

Of course we would like to see those same standards applied to producers in other countries. However, we have to bear in mind, not just with Mercosur but with other third countries, that as an exporting nation, if we apply EU standards to our imports, then equally we could be held to different standards when we export so that is a consideration. What we want is a level playing field but we do not have it.

Paul Daly (Fianna Fail)
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I do not think there is a higher standard of production of beef in the world than the EU standards, so we cannot lose on that one.

Ms Sinéad McPhillips:

Absolutely, but the point I am making is that different countries have different standards and requirements. When we export to Asian markets, for example, we go through, as the Senator is aware, a lengthy market-access process. This is to prove that our standards are equivalent to the specifics of those markets, so it cannot really be a one-size-fits-all scenario. We have those concerns in relation to sustainability, and they have been a key part of the further discussions with Mercosur since the original agreement in 2019, that additional sustainability standards were added to the agreement and an additional protocol was added last December. There are further reassurances from the Commission in what it has produced now, but all of those assurances are still being examined by us and by the Department of Foreign Affairs and Trade to see how well they stand up.

CETA, the agreement with Canada, has been provisionally enforced since 2017. It allows Irish and Canadian companies to take advantage of the beneficial terms of the agreement. Ninety nine percent of goods now have access to the Canadian market tariff-free and EU beef and sheepmeat access into Canada has been fully liberalised. Irish agrifood exports to Canada have increased by 58% in value since 2017, and that is largely driven by an increase in spirit drinks exports. This shows the benefits of some of these free trade agreements, while obviously acknowledging that Mercosur is a significant cause for concern.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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I wish Ms McPhillips the best of luck in her new role. She has a tough job ahead, with all of the different things, but she is well-seasoned, in that she knows the job inside out, so the best of luck. On Mercosur, I want to say I am opposed to it, unlike Senator Daly, for this simple reason. If we look at the backstops that have been put into it, the so-called cushions, the first thing is we are not on a level playing field in the way an Irish farmer has to adhere to animal welfare regulations and the different EU regulations, compared to what they do in Brazil and all the other countries. It is a totally different ball game, so no one can tell me it is a level playing field. In Ireland, regarding the CAP and EU inspections what percentage of the 130,000 farmers get audited?

Ms Sinéad McPhillips:

I could not put a figure on it but I will follow up on it.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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I imagine it would be 1% or 2% and when we talk about farmers in Brazil being audited, it is going to be like a fly on a wall. To be quite frank, it is going to be the very minimum. On the backstop, am I correct in saying that they are talking about basically a 10% drop in European meat prices before they put a brake on it? However, my understanding is, and correct me if I am wrong on this, that if it was 9% for five years in a row, the brake does not stop. Is that correct?

Ms Sinéad McPhillips:

I think the Deputy is correct. 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 increase from Mercosur by at least 10% and import prices are at least 10% lower than domestic prices.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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It can be 9% for five years in a row, which is 45%, and there is nothing we can do about it, to put it simply.

Ms Sinéad McPhillips:

I not sure whether that is cumulative or not.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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From my understanding it is yearly on the price. Regarding the tonnage coming in at the moment with the tariff that is on it, am I correct in saying that tariff would be lowered completely, along with the 50,000 extra tonnes?

Ms Sinéad McPhillips:

The tariff would be lowered for 99,000 tonnes over a six-year period. I could be wrong, and we will check this, but I think at the moment about 200,000 tonnes is coming in in most years from Mercosur countries. Where the 55,000 tonnes comes from is that the economic modelling assumption is that we continue to have 200,000 tonnes coming in and rather than that increasing by 99,000 tonnes, it increases by roughly 53,000 tonnes. In other words, the South American exporters get a benefit from the reduced tariff on the 200,000 tonnes and the increase so they get 253,000 tonnes of total exports rather than 200,000 tonnes.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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In fairness, the Department has been tic-tacing with Europe on the Mercosur deal. Will it be down to a vote in the Parliament and the Council of Ministers? The way it is looking at the moment, I want to call it out straight. My reading of it is that if France gets more money, Italy will throw in the towel and the veto is gone with the Lisbon treaty and all of that. It looks like it will go through the Council of Ministers and that the only hope that Irish people have is of blocking it or the only hope for Ireland is through the European Parliament. Is that fair to say?

Ms Sinéad McPhillips:

The Commission's recent proposal gives some clarity on the legal approach it is taking to the agreement. It foresees a split agreement, whereby the trade elements-----

Michael Fitzmaurice (Roscommon-Galway, Independent)
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Sorry for interrupting, but am I correct in saying that by doing that split, they have now eliminated the national parliaments from having a vote?

Ms Sinéad McPhillips:

Yes, on the trade elements. They have taken out the trade elements and split those. The trade elements require adoption by a qualified majority vote in the EU trade Council and then by a simple majority vote in the European Parliament.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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When the Department is tic-tacing with them, who is allowing them to split this deal? Does a Council of Ministers not block them, or is it von der Leyen or is it the Commissioner or who?

Ms Sinéad McPhillips:

The Commission has the power to propose legislation, so it has the right to propose how they would go about adopting-----

Michael Fitzmaurice (Roscommon-Galway, Independent)
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So unelected bureaucrats have proposed this?

Ms Sinéad McPhillips:

The Commission has competence for trade matters and then obviously there are joint competencies-----

Michael Fitzmaurice (Roscommon-Galway, Independent)
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They are not MEPs.

Ms Sinéad McPhillips:

No, but in relation to competence, 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. Trade is an exclusive EU Commission competence so therefore, if it is exclusively the trade elements of the deal, the Commission has the power to propose that it is ratified.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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Has Ms McPhillips ever seen this done before?

Ms Sinéad McPhillips:

The Canadian deal, CETA, that we referred to earlier was done as a provisional agreement only on the trade elements. As the Deputy knows, the whole CETA has not yet been ratified by member state parliaments, so it is definitely not unprecedented. There will be a qualified majority vote at the EU trade Council, and then a simple majority-----...

Michael Fitzmaurice (Roscommon-Galway, Independent)
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What does that mean? Is that the ministers?

Ms Sinéad McPhillips:

Yes, that would be the trade ministers, so in our case the Tánaiste. For the qualified majority vote, a blocking minority would be required to prevent adoption of the agreement by the Council of trade ministers. That requires at least four member states representing more than 35% of the EU population either voting against or abstaining on the proposal.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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Voting against or abstaining?

Ms Sinéad McPhillips:

Yes, voting against or abstaining.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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It is either that or then it goes to the Parliament, is that it?

Ms Sinéad McPhillips:

The Parliament is a simple majority vote, "Yes" or "No".

William Aird (Laois, Fine Gael)
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I have never met Ms McPhillips before but I wish her well in her new role. She is going in at a very challenging time when there is the nitrates directive, the CAP and Mercosur. On a good day you will win all three but on a bad day you will lose all three. Ms McPhillips has a very exciting time in front of her.

I want to make it very clear that I am totally opposed to Mercosur. Totally opposed to it. Maybe I will stand in here like Senator Daly in a few years' time and say that it is over, or whatever, but I have a huge and deep commitment to the beef farmers in this country. I stood idly by and saw nearly 200,000 sucklers gone. It makes me very tearful that I knew. I followed my father to many farms and I saw the very best of stock people, old stock people, where traditions were carried down from father to son or daughter. I saw a lot of those farms being forced into milk, which they did not want to do but they could not sustain a family farm any longer. Now, at least we see a situation where those people are getting well rewarded for the cattle they are producing. Anything out there, like Mercosur, to harm that at this time is not worth the risk. I am totally opposed to Mercosur.

I will be very brief on the following points and perhaps Ms McPhillips can answer them. Has the Department conducted an up-to-date impact assessment on the implications for the Irish beef sector of increased beef imports from Mercosur countries? What specific protections are being followed for the Irish suckler and beef farmer in light of these potential market distortions? How will this deal affect beef prices? What contingency plans are in place? If Ms McPhillips could please answer that question first and then I can judge my time and maybe go down through the rest of them.

Ms Sinéad McPhillips:

As I mentioned, an impact assessment was carried out in 2021 by the Department of Enterprise, Trade and Employment. That was specifically on the trade aspects of Mercosur. As I have explained to the other Deputies, those trade aspects have not changed since the agreement was originally negotiated in 2019.

William Aird (Laois, Fine Gael)
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What of the effect on beef prices?

Ms Sinéad McPhillips:

All the assessments are economic models and are subject to a set of assumptions. They found that the additional imports, assuming they were in high-end cuts, would reduce producer returns in Ireland by about 2%, or €55 million.

William Aird (Laois, Fine Gael)
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By 2%, all right. That is what we have said but let us see what happens there. What guarantees has the Department received that the meat and the agrifood products entering the EU under this agreement will be produced to equivalent environmental, animal welfare, and traceability standards? We are all asking this question but we are not being told. Is Ms McPhillips happy that these regulations are going to be met?

Ms Sinéad McPhillips:

As I have said to other members, there is a distinction between the SPS food safety standards, which are a prerequisite for any food entering the EU - the Commission has committed to further audit and inspection on those - and then the environmental and animal welfare standards, as the Deputy has mentioned, which are different in the EU and are higher in the EU than in other countries. The Commission has included certain reassurances in its proposals and those additional assurances are currently being examined by our Department and the Department of Foreign Affairs and Trade.

William Aird (Laois, Fine Gael)
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I will ask another question for whoever wants to answer. Why is the EU prioritising access to beef from South America at a time when Irish and EU farmers are being asked to do more sustainability? In other words, has Ireland used enough influence to slow or oppose the ratification of this deal? We met people on this already and I asked the very same question of representatives who came over here from the EU.

Ms Sinéad McPhillips:

As the Minister, Deputy Heydon, has frequently said, the Government position is that there are significant concerns around the Mercosur agreement and particularly around its impact on beef farming in Ireland. The Minister has repeatedly raised those concerns in discussions with his EU counterparts and has raised them consistently at meetings of the AGRIFISH Council.

William Aird (Laois, Fine Gael)
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That is fair enough. I will ask a direct question now. In the event that Irish beef farmers are negatively impacted by this deal, and I mean starting now with the price of beef going down, will the Department seek EU-level compensation funds for market adjustment from this time now?

Ms Sinéad McPhillips:

In bringing forward the proposals the European Commission has said to us that there will be a market support fund for farmers who might be negatively impacted. That is one of the things-----

William Aird (Laois, Fine Gael)
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That is great news. Will the Department set the guidelines for what farmers get for their cattle? For example, if I sell cattle in any part of the country today weighing in at €4.50 per kg or whatever it is, will the Department give me the same price when this beef comes in and if it has a negative effect on the market? That is where it is. It is around the ring when I produce. Ms McPhillips is telling me today that we will go in at that price and I am happy with that.

Ms Sinéad McPhillips:

The European Commission has given that assurance of a market protection fund-----

William Aird (Laois, Fine Gael)
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That is grand; sure it is all we want.

Ms Sinéad McPhillips:

-----but we need to-----

William Aird (Laois, Fine Gael)
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There is the news for everybody here today: what you are getting for the cattle today - this is no laughing matter - you will be guaranteed that if anything negative comes out of this-----

Ms Sinéad McPhillips:

I am sorry, Deputy-----

Aindrias Moynihan (Cork North-West, Fianna Fail)
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Let Ms McPhillips answer the question.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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That is not correct. If it drops 9%-----

Aindrias Moynihan (Cork North-West, Fianna Fail)
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Let her answer the question, please.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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In fairness, if it drops 9%, you are not-----

Aindrias Moynihan (Cork North-West, Fianna Fail)
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Deputy Fitzmaurice, please let her answer the question.

Ms Sinéad McPhillips:

What I am trying to say is that the Commission has assured us there is a market support fund there but the terms and conditions of what would apply to that market and how we would access that funding are far from clear. That is one of the issues we need to get further clarification on.

William Aird (Laois, Fine Gael)
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At the minute, it is not clear. We are at a situation in this country where we have been trying desperately hard to get here. It has been very hard to get here but we are getting returns for the cattle. Everybody can see it out there now for the first time in 20 years or 25 years. I can see it on farmers' faces that the confidence is there in everything. This Mercosur deal has now come like a cloud over our heads. If that dampens everything and the price of cattle drops again dramatically, we have to have a guarantee from the EU, or else what are we doing in the EU? Let us clear the hell out of it. Sorry, I have gone over my time.

Ms Sinéad McPhillips:

As Deputy Fitzmaurice said, there is a very high bar for those safeguard clauses to be triggered and for any compensation or support for farmers to come into being.

Paul Lawless (Mayo, Aontú)
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I thank the Department officials for coming in. I wish Sinéad McPhillips all the best in her new job. I look forward to working with her over the years ahead.

I am totally opposed to the Mercosur trade deal. It is incredible really. It has been a masterclass in political doublespeak from the European Union in many ways. Over the last hour we have been talking about the nitrates derogation and we have been talking about all of the stringent regulations that pertain to farmers in relation to water quality and so on. We are fighting for the nitrates derogation with our European colleagues and meanwhile the Commission is seeking to sign a trade deal with the Mercosur countries that will see thousands of hectares of forestry removed. It does not make any sense. I am actually in shock in many ways with the level of detail and the level of analysis that we spoke about in the last session of this committee in relation to the nitrates derogation. In this session we are talking about almost 100,000 tonnes of beef coming in from the Mercosur countries. Ms McPhillips is only reporting what is coming from Europe but she has said that environmental standards will not be the same and that there may be some parity in relation to food quality or food safety but not in relation to environmentalism. Does it make sense to Ms McPhillips? What is her sense on it? To me, the two do not make any rational sense. A lot of this is really incredible and it is doublespeak. What is Ms McPhillips' sense on it?

Ms Sinéad McPhillips:

Throughout the negotiations Ireland has consistently highlighted that the agreement with Mercosur should include legally binding commitments on sustainability standards, including climate, biodiversity and deforestation protections. What the Commission would say to us, and I am just repeating what it would say, is that additional protections have been included in the protocol that was agreed last December and that will be kept under review but-----

Paul Lawless (Mayo, Aontú)
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I am sorry to interrupt Ms McPhillips, but what are the legally binding environmental commitments in this deal?

Ms Sinéad McPhillips:

One, for instance - I suppose we would say it is not necessarily an extensive protection - is that if one of the Mercosur countries was to leave the Paris climate agreement, then the EU-Mercosur agreement would be suspended for that country. There are certain references also to deforestation protections and so on.

Paul Lawless (Mayo, Aontú)
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What level of deforestation is allowable under the deal?

Ms Sinéad McPhillips:

There are commitments on the part of the Mercosur countries - I might come back to the Deputy on this to give him the detail of it - to honour international deforestation agreements.

Paul Lawless (Mayo, Aontú)
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Are those commitments on the number of hectares of rainforest that are allowed to be removed?

Ms Sinéad McPhillips:

There is a commitment to enhance efforts to stabilise or increase forest cover from 2030 onwards. I will come back to the Deputy with the exact wording of that.

Paul Lawless (Mayo, Aontú)
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It is very vague. We all live under the same sky. What is the difference between emissions produced in Mayo, Dublin or Donegal and those produced in Argentina or Brazil?

Ms Sinéad McPhillips:

The trade element of this deal was agreed in 2019. There were significant concerns voiced then by many EU member states about the sustainability impacts of the agreement. That is why the Commission has gone back and added additional safeguards, as it would call them. We need to test those. It is clear from the Government position that intensive engagement is needed by the Commission to explain and justify the details of the final package to member states.

Paul Lawless (Mayo, Aontú)
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Farmers are going to be hurt significantly by this deal, especially beef farmers. What analysis has been done? Analysis was done, as Ms McPhillips mentioned, on the potential reduction of beef prices in Ireland. Who are the beneficiaries of this deal? Has there been analysis done on German and French car manufacturing? By what percentage of sales are they due to benefit from the deal?

Ms Sinéad McPhillips:

Again, I can give the Deputy the details of the EU Joint Research Centre report that has been done on the total impact of EU-Mercosur, which overall I think is seen as economically beneficial for EU and Mercosur countries. In the agrifood sector, there are significant benefits for EU exporters in certain sectors as well, while many countries have vulnerable sectors they wish to protect. The analysis I referenced previously that was done in Ireland in 2021 found there were opportunities for the Irish spirits drinks sector and the dairy sector to increase exports to Mercosur countries as well.

Joanne Collins (Sinn Fein)
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I thank the officials for giving of their time to be here. We have gone around the floor and these questions have probably been asked and answered already, but I will try to ask them in a different format to make it more interesting.

I am going to touch on the standards side of this, which has been asked about plenty of times. Our farmers pride themselves on the standard of our beef. We are world-renowned for the standards we have. Ms McPhillips is saying that, within the agreement, the EU is looking to have some type of standards for the Mercosur countries. If they are not to the same standards as what we have to export to, then what is stopping Irish farmers from decreasing our standards in protest if the Mercosur countries can do it more cheaply? I mean the likes of injecting hormones into livestock in Mercosur countries, which we cannot do here because it is not allowed under EU regulations. It takes the fairness out of the deal and the trade, so it does not turn out to be a fair trade.

The other side I wish to touch on, which colleagues across the floor have spoken about, is the environmental impact. We have a plant in Edenderry that used to be fuelled by Bord na Móna peat. Bord na Móna had to be shut down because of our emissions, so we now ship the rainforest into Shannon Foynes Port, which takes 52 days, shunt it up and down a pier with trucks and cranes, and then take it up to Edenderry by truck again. Think of the emissions of that alone. I do not know if the Department, or whichever body needs to, has ever done a study on that, but surely that is not cutting emissions. Emissions are emissions regardless of what country they come from. As my colleague said, we all have the same sky. What is the point of us bending over backwards to cut our emissions if we are going to incentivise another country to cut down a rainforest so we can hit net zero, or try to hit it, when that country is going to create huge emissions?

This does not seem to make sense on the environmental or standards side. What if I was at the end of line where I was selling our cattle for beef and I was depending on that price yet I knew that another farmer doing the exact same thing on the other side of the world was selling into the same market but did not have to go through the same cost? Do not get me wrong - the farmers in this country are willing to do it because we have such good-quality produce, but if it is costing us one thing and costing other countries something else, then it is not very fair. There is going to be a kick back somewhere along the line. The population is going to suffer because the beef is not going to be as good. That is going to be an awful shame because we have such a good name for our beef.

Ms Sinéad McPhillips:

I thank the Senator. I fully understand the points she is making. On the SPS standards - the food safety animal health and plant standards - they are EU standards and are there to protect EU consumers. They apply to all food, be it produced in the EU or imported. The Commission has committed to increasing the number of SPS audits and checks in third countries and to strengthening controls on the ground to ensure those standards are upheld. On production standards, which are environmental standards of production and animal welfare standards, the Commission has also committed to rolling out initiatives to better align the production standards of imported products with EU production standards. That is somewhere we would like to see more detail from the Commission on what that means in practice.

Natasha Newsome Drennan (Carlow-Kilkenny, Sinn Fein)
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I thank the officials for coming in. We are beef farmers at home and I am totally opposed to this. Beef farmers are being thrown under the bus for the sake of Germany and its big fancy cars. It is absolute madness. Can we get a copy of the environmental structures Ms McPhillips was talking about? I understand dairy is going to increase by a small bit. It will not be huge. The officials are saying the effect on Irish beef farmers is €55 million and the pot of money that is being dangled in front of us is €63 billion for the whole of Europe. That pot of European money is a fund in case of us falling on hard times. How will that be split up throughout Europe? What piece of the pie are we going to get? That is all right for next year, but what about the year after, the one after that and the next generation of farmers? I cannot see that money still being there.

Nothing is telling me that it will be there. I would not trust this Government, never mind the European Parliament, to do right by us when we are such a small piece of the jigsaw. Ireland is tiny in comparison with the whole of Europe.

Others have spoken about rainforests being cut down. It is okay for them to have a black hole over their skies but our skies will be clear. We will have to pay huge fines for not meeting our targets. We will not meet them. Every Government building should have solar panels on it. Not enough is being done. Most of it was blamed on farmers, from what I can see. There is huge anger out there, especially among beef farmers. The whole thing baffles me.

On the environmental structures, who is going to monitor Brazil? It was stated there will be more checks on meat coming in. Can we trust that there will be more checks in place? It will cost money to do that. Is that a hit on the Irish Government? Will it have to fork out that money? All these things need to be taken into consideration. I will leave the witnesses with that for a minute. Plenty of anger.

Ms Sinéad McPhillips:

I will speak to the question on crisis supports. In 2019, when the trade elements of the deal were done, the Commission committed to a dedicated €1 billion market disturbance fund which could be-----

Natasha Newsome Drennan (Carlow-Kilkenny, Sinn Fein)
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For Ireland.

Ms Sinéad McPhillips:

No, for the EU as a whole. It could be used for farmers impacted. The recent MFF or EU budget proposals for the period 2023 to 2034 came out in July. They include a €6.3 billion crisis reserve to deal with all aspects of crisis in the EU over that period. There was a specific reference in that to trade agreements, and, I think, to Mercosur in particular. There was not a ring-fenced amount for Mercosur. It is likely there will be a high bar in the context of accessing any of the funding from that crisis reserve. It would only become available if the safeguard measures that we have talked about and that are included in the agreement in terms of price and volume of imports were found to have been met. That is when that safeguard would trigger.

Another point to consider is the full impact of those market concessions would be phased in over the six years of that tariff rate quota introduction. The 99,000 tonnes will not arrive in one big bang; they will be phased in over six years from adoption.

Natasha Newsome Drennan (Carlow-Kilkenny, Sinn Fein)
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On the environmental structures, can we get a copy of-----

Ms Sinéad McPhillips:

We will get the Deputy the specific additional-----

Natasha Newsome Drennan (Carlow-Kilkenny, Sinn Fein)
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Brilliant. We had a Chinese delegation in here last week. The dairy sector in their country has exploded. I asked if the beef sector was going in the same direction. They did not give me a yes-no answer, but I knew the answer was "Yes" because they spoke about food security. To us, it does not matter because we do not export that much beef to them. However, they import a lot of beef from Mercosur countries. If the Chinese become self-sufficient and no longer need as much beef, will that Mercosur beef need to go somewhere else? Will it flood into Europe? Can we trust that the beef that will come in will be capped for evermore? I do not think we can.

Ms Sinéad McPhillips:

That is a complicated question. The point is that the EU is open to imports from third countries. That is necessary because the EU is a major net exporter of food, so has to keep two-way trade going. We have seen from trade tensions elsewhere that European farmers, particularly Irish farmers, can be vulnerable to impacts where there are blockages to trade. We need to keep that in mind.

Mercosur countries can already export beef to the EU, and they do so. I will come back with exact figures for exports. The free trade agreement would, after the six-year phase-in, allow 99,000 tonnes of beef imports to come in at a low tariff rate. That is the concession in terms of the Mercosur agreement with the EU.

Natasha Newsome Drennan (Carlow-Kilkenny, Sinn Fein)
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That is for the 99,000, but it is not to say that more will not come in.

Ms Sinéad McPhillips:

More could come in but it would pay the full tariff rate.

Joe Cooney (Clare, Fine Gael)
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I thank the witnesses for coming in. I wish Ms McPhillips the best of luck in her new role. She will need it. The first thing she might do is get rid of Mercosur. Any time there is change, there is a concern. I am 100% opposed to it because I have been listening to farmers up and down the country and can understand their concerns. I will not stay too long on this because Ms McPhillips has been grilled on it for the past hour. The concern is the standard of the beef. Some 99,000 tonnes of beef will come into the country. Will it be up to the standard of the beef we have here in light of the cost of producing beef in this country? We have a great thing going at the moment. We have never seen the trade better placed here. Are we going to upset that? If we do, it would be a total disaster. I am delighted Ms McPhillips said a support fund will be put in place. That would need to be a condition. If we plough ahead with this, my belief is that support fund will be needed.

I do not want Ms McPhillips going back over what she has said a number of times. We are well aware that farmers have been affected by TB. Some of those farmers are suffering in a major way now and we do not want them to go through the same thing in the future. If this deal is going to go ahead, make sure good conditions are put in place to support farmers in our country.

Ms McPhillips's referred at the end of her opening statement to the EU having many free trade agreements in place and that is in talks with third countries. Will she give us an update on what they are about and what is going on there?

Ms Sinéad McPhillips:

To clarify, the 99,000 tonnes are for the EU market as a whole rather than just the Irish market. Obviously, however, we are-----

Joe Cooney (Clare, Fine Gael)
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How will we determine how much will come into our country?

Ms Sinéad McPhillips:

Any imports into the EU market could potentially impact on the average EU price. That is our main concern, rather than what comes into Ireland. The EU has an ambitious trade agenda. It is in the process of negotiating other trade agreements, many of which have potential significant benefits for the Irish agrifood sector and which we support. We have spoken of the Canadian free trade agreement, which is in place and which has given rise to significant increased agrifood exports to Canada. We have doubled the value of agrifood exports to Japan, which is a very good and high-potential market. The protected geographical indication for Irish grass-fed beef has potential in that market. We have a free trade agreement with Korea and beef access to Korea, so there is potential growth there.

In terms of negotiations, we heard yesterday in Brussels that there is provisional agreement on trade with Indonesia. That is a significant potential market for dairy exports. Negotiations are ongoing with Thailand, Malaysia and the Philippines. In some of those markets, there are pluses and minuses that we need to be careful of as negotiations continue.

Overall, as an exporting country, there is a lot of potential there. EU-India negotiations have been going on for many years but seem to be gaining some momentum now. For the spirits drinks sector, India is a significant target market for exports.

Joe Cooney (Clare, Fine Gael)
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Without going into much detail, what are the pluses and minuses that could affect us going forward?

Ms Sinéad McPhillips:

For any free trade agreement, as I said to other Deputies, the Commission has competence for trade negotiations but in the course of those negotiations, it will consult with member states to see what the sensitivities are. Obviously, in examining the detail of any Commission proposals, we would look at whether we are sensitive to imports from those countries, whether they could disrupt the EU market and whether there are significant potential export markets there. There is always a balance to be struck in relation to trade. It is very rarely either fully good or fully bad so we need to have the opportunity to assess and to input when the Commission is negotiating on behalf of the EU.

Joe Cooney (Clare, Fine Gael)
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The most important thing is to protect agriculture and our farmers as much as possible. I hope to work with the witnesses to achieve that, if possible. I wish Ms McPhillips the best of luck in her new role.

Aindrias Moynihan (Cork North-West, Fianna Fail)
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Deputy Toole is next.

Gillian Toole (Meath East, Independent)
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Thanks for letting me sneak in. I have a few questions and apologise if I am duplicating what colleagues have already asked. In the context of imports and exports from Ireland and Europe vis-à-vis Mercosur and other trade agreements, at what stage is Ireland's land use review at? I ask this for two reasons, one of which is self-sufficiency for future food production and the other is the distribution of land for the location of renewable energy infrastructure. I come from east Meath where the best of tillage land is being used, in the absence of guidelines, for solar, battery storage, gas peaking plants and so on, which I completely acknowledge is necessary but I am wondering if there is an overall plan. If not, why not? It is important, in my humble opinion, in the context of the bigger picture involving Mercosur, CETA and any other trade agreements.

On the CETA agreement, there will be corporate compensation for loss of business going forward but is there any reciprocity there? I am thinking in particular of the example of Irish agriculture. Depending on how Mercosur and other trade agreements play out, the Irish farming community, as a business, may be facing potential losses. Is CETA done and dusted and agreed or is there any chance of incorporating reciprocity for potential Irish agrifood losses going forward?

Finally, in terms of potential developing markets in far flung places like Indonesia, the Philippines and so on, in the context of the transportation of goods and the net carbon output of that, what overall planning is taking place vis-à-vis the potential loss of domestic food production and inter- and intra-European transfers? It seems to me that we have climate hypocrisy here. On the one hand, the trade deal makes everything hunky-dory from a carbon perspective and we negate that and yet we have different levies on the citizen, domestic businesses and the farming community through the nitrates derogation, the water framework directive and so on. I just wonder if there is anybody, anywhere doing an overall balancing exercise on the net carbon tonnage. I hope that makes sense. When I saw this meeting on the board I decided I would drop in. I would say the Chair is sorry he let me in.

Aindrias Moynihan (Cork North-West, Fianna Fail)
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You are very welcome to take part.

Joe Cooney (Clare, Fine Gael)
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Does the Deputy have a farming background?

Gillian Toole (Meath East, Independent)
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Yes, I have.

Ms Sinéad McPhillips:

I do not have an update on the land use review but I can come back to the Deputy on that, if needed. In relation to CETA, the agreement with Canada, the trade aspects of that agreement are already provisionally in force since 2017, allowing Irish and Canadian companies to take advantage of the beneficial terms of the agreement. That has been beneficial in terms of our agrifood exports to Canada. Several member states, including Ireland, have yet to fully ratify the full agreement, which is wider than trade.

The Deputy mentioned the potential loss of food production and while obviously that is a concern, Ireland is fully self-sufficient in food production. We rank as the first or second most food secure country in the world when those studies are done. We export about 90% of what we produce because of our comparative advantage, particularly in grass-based livestock production. On the issue of trade and carbon costs, we export food to 180 countries around the world. I would say that is done in a reasonably low-carbon way in that most of those exports go by sea; there are no air miles, so to speak. The benefits of that trade both for ourselves and others - and trade is always a two-way street between importers and exporters - is significant and keeping that trade going is really important in terms of the economic and social sustainability of rural Ireland.

Gillian Toole (Meath East, Independent)
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I thank Ms McPhillips.

Aindrias Moynihan (Cork North-West, Fianna Fail)
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Most of my Mercosur questions have already been asked but I have one or two quick questions that I want to put to our guests. Mercosur has raised real concerns for farmers both in terms of the price they are going to get but also in terms of the quality and standards. As we mentioned earlier, a lot of questions are being raised on the environmental front as well as with regard to animal welfare standards. Safeguards have been proposed but they are not fully defined or fleshed out at this point. At what stage will they be defined and who will be dealing with that?

Ms Sinéad McPhillips:

I thank the Cathaoirleach. What Ireland has said consistently is that those standards and safeguards, particularly in relation to environmental standards, are really important and that intensive engagement by the Commission is needed to explain and justify the details of the final package to both member states and stakeholders. It is really important that there is an understanding of what is in scope and what the Commission has now offered. At official level we continue, with our counterparts in the Department of Foreign Affairs and Trade, to interrogate what has been put on the table. Certainly, at political level, the Minister, Deputy Heydon, and the Tánaiste have asked for further engagement. We understand that the Commissioner for Trade and Economic Security, Mr. Šefovi will visit Ireland in early October and there will be an opportunity then for engagement and further understanding of the Commission's interpretation of those safeguards.

Aindrias Moynihan (Cork North-West, Fianna Fail)
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I will move the goalposts a little now and move on to pigmeat products and the tariffs being imposed on EU pigmeat products by China. It is claimed that this is an anti-dumping measure. Investigations have been going on for some time at this stage but is evidence emerging of this? In the meantime and looking to the future as well, this is important because a large proportion of our agrifood exports into China are pigmeat products. What efforts are being made by the Department to find alternative markets for Irish pigmeat products?

Ms Sinéad McPhillips:

This was something that was raised by the Minister at the Agriculture and Fisheries Council, AGRIFISH, yesterday, with serious concerns about the Chinese attitude. Clearly, our view is that EU and Irish exports of pig meat and pig meat by-products to China could in no way be characterised as dumping. There is no breach of WTO rules, which is what has been alleged by the Chinese authorities. We have asked the Commission to take this case very seriously. We received assurances yesterday from Commissioner Hansen that would be done and that the EU would make every effort to defend EU exports to China and get those tariffs lifted. Although China calls them something other than tariffs, that is their effect. We have seen a series of different investigations of different European products by the Chinese authorities. That is a worrying trend for the value of the market.

Aindrias Moynihan (Cork North-West, Fianna Fail)
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Is the focus solely on the tariffs, or is there effort into finding alternative markets as well?

Ms Sinéad McPhillips:

There is an ongoing effort to find new markets for Irish products and build the markets we have. We have a meat market access unit within the Department whose focus is on maintaining and building access to those markets. We work closely with Bord Bia to develop those markets. We have a series of ministerial trade missions to various markets every year with intensive engagement. I will try to find the specific section on pig meat, but there are intensive engagements. It is not just necessarily about finding new markets; it is about finding the best market for each product and product category. That is what we are trying to do.

Aindrias Moynihan (Cork North-West, Fianna Fail)
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We are limited with our time. If Ms McPhillips has details on the efforts to find alternative markets, I ask her to forward those on to the committee. On behalf of the committee, I thank the witnesses for their extensive answers and contributions, and for going back and forth with members today. Go raibh míle maith agaibh. As there are no further matters for discussion today, our meeting stands adjourned.