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.