However, the EU has equivalent opportunities to export more into Mercosur countries (the quotas agreed are reciprocal).
The same concerns arise regarding differences in standards as are relevant to beef.
Mercosur and dairy: extra volumes at lower tariffs
The dairy concessions under the EU-Mercosur deal are bilateral. Each party will be given the same opportunity to export to each-other’s market tariff free, after a transitional period of 10 years – i.e. within quota tariffs will be lowered by 10 % p.a. from their current levels. Dairy import tariffs average out at around 28% of the EU price for the product currently.
The volumes concerned are 30,000t cheese, 10,000t milk powders and 5,000t infant formula. There has been no further details as to what type of cheese, or as to the divvying out of the export opportunities between countries in either group.
This is not in the IDELE document, but it is worth noting that there has been no import of SMP, butter, cheese, WMP or whey powder from the Mercosur countries into the EU in the last number of years.
Exports from the EU to the Mercosur country are tiny, with only 900t of whey powder and 100 t of WMP exported to Brazil in 2018 (and this reflects a normal enough historical trade pattern).
Validation of the agreement
The Mercosur/EU trade deal is expected to be, similar to the Japan agreement, a simple trade deal which does not require individual member states’ approval. For implementation, it must be adopted by the EU Parliament (blocking minority is 35%) and Council (qualified majority = 55% of MS representing 65% of the population).
There remains many technical details to be sorted, as well as evaluation work before any votes in Parliament and Council, and this could take around 2 years before ratification and implementation actually begins.
So any impact from Mercosur, good or bad, will be some years down the line relative to a Brexit outcome!
Note: while the above on the validation of the agreement reflects the IDELE analysis (and the presentation of the Deal by the EU Commission), some hold the view that the deal is not a simple trade deal, because it includes intellectual property considerations (protection of Geographic Indication for up to 350 products, for example). Should this be the case, there may be a legal argument that the deal does indeed require approval by individual member states, which would give every member state an effective veto. Watch this space!
CL/IFA/15th July 2019