Trade deal implications as EU Green Deal strategy approaches adoption

This is a significant development as F2F is one of two key strategies embodied in the Green Deal, the roadmap adopted in 2019 by the EU for its implementation of the United Nations 2030 Agenda and Sustainable Development Goals.

The other Green Deal strategy is called Biodiversity Strategy for 2030 (BDS) and together with F2F will have major implications within Europe for agricultural production, commodity prices, impact on farmers, cost to the consumer and effect on EU trade policy (see Aug 19 article in this column).

Therein lies the relevance to Australia in its ongoing negotiations with the EU on a trade deal.

Until last month there was very little scrutiny of what the Green Deal would mean for Europe's agriculture sector.

Then without any announcement, the EU released a technical report from its Joint Research Centre confirming what the farming sector has feared, an unprecedented reduction in EU production capacity with commensurate impact on farmers' income.

But worse, it also exposed the inconvenient truth that the largest part of the reduction in emissions achieved through the F2F and BDS strategies could be erased through relocation of production to third countries.

Copa Cogeca (the united voice of farmers and agri-cooperatives in the EU) was quick to respond with a call on the EU to look to its trade policy if a loss of some of its agriculture to third countries was to be avoided.

In the space of less than three weeks, concern levels escalated to the point of a joint declaration by 27 European agriculture-related organisations/confederations calling on members of the ENVI-AGRI committees to "vote clearly against the most damaging compromise amendments of the draft report that are putting the future of our European farms and their related industries at risk".

That the vote on F2F amendments took ENVI-AGRI two days to complete and 247 pages to record underscores the complexity and breadth of issues contained in the strategy. Compromise amendments alone amounted to 85 pages.

Not surprising therefore that a succinct summary of what F2F now looks like has yet to be published.

However in a statement made on Friday on the outcome of the vote, Copa Cogeca acknowledged that the text now looked more positive on trade (from EU perspective) while at the same time a small but very impactful number of proposals still look set to make the transition untenable for farmers.

What this suggests is that in its approach to imports, the EU will strive to achieve planetary boundaries for animal and crop production. This potentially will mean equivalence to EU standards in issues such as antimicrobials, pesticides, feed additives, animal welfare and sustainable development in addition to the Carbon Border Adjustment Mechanism announced by the EU in July this year.

The work of the ENVI and AGRI committees on F2F is virtually complete as it will now move to plenary session in October where the EU Parliament will formally vote on adoption.

Once that occurs, implications for trade deal negotiations should become clearer.

THE stop/start nature of Uruguay's interest in a free-trade deal with China has reignited with Uruguayan President Luis Lacalle Pou announcing last week that talks with China will soon commence for a bilateral accord.

According to the Buenos Aires Times, Lacalle Pou stated that China had formally accepted Uruguay's proposal to advance with a trade deal.

A feasibility study with an ambitious timetable will start immediately and if positive, drafting of the agreement will begin early next year.

Previously China had shown reluctance to negotiate with Uruguay on a bilateral basis because of that nation's membership of trading bloc Mercosur with neighbouring countries Argentina, Brazil and Paraguay.

The history of the issue goes back to 2015 when Uruguay's then President, Tabare Vazquez, was keen to progress a deal preferably through Mercosur or bilaterally if need be.

But with no unified appetite from Mercosur and China not willing to deal directly with Uruguay, nothing progressed.

While there seems to be different interpretation on whether member countries of the bloc can or cannot pursue individual deals, there is no doubt that the issue is a sensitive one given the varying attitudes of the member countries toward China depending on who is in power at any given time.

Uruguay's announcement has no doubt strained relations within the bloc but Lacalle Pou seems unconcerned.

According to the BA Times when asked how he expected his regional counterparts to react, he said: "If it generates a little discomfort, it will be nothing more and nothing less than a little discomfort."

LAST week's heightened grid rates have so far held their ground with four-tooth ox at 760c/kg and heavy cow at 720c in southern Queensland.

With operators staring down the prospect of losing time and the threat that posed to holding a workforce together, the move has resulted in some extra cattle coming forward.

Consequently the majors now have September filled and are starting to book into October.

But how long these rates hold remains to be seen.

Saleyard numbers this week in Queensland and northern NSW suggest cattle are starting to move.

Roma had 6500 on Tuesday, Gunnedah had 2800, Dalby early in the week was building towards 4500 for Wednesday and even Warwick was double recent numbers with almost 900.

Frosted pastures and oats crops coming to an end of their run usually start to push some cattle out as the final quarter approaches.

In the US, imported lean beef prices are moving only1cent/lb either way at the moment with indicator Australian/NZ 90CL blended cow quoted at US281c/lb FOB East Coast.