Summary
The EC has de-listed 20 Brazilian meat and poultry processing plants, effectively halting imports into the EU from the affected meat company facilities. The Brazilian government has described the EC’s action as constituting ‘a trade war’ and see’s the EC’s action as a response to EU producer pressure to restrict the tariff rate quota for import of beef in the context of the EU-Mercosur negotiations. The Brazilian government is planning to appeal against the EC’s action in the WTO. The current developments in the Brazilian-EU meat sector trade highlight the importance of food safety and SPS issues in exporting to the EU. Given the challenges facing ACP exporters in consistently complying with evolving EU SPS and food safety standards it would appear enhanced structure for dialogue around these issues are required to ensure that in protecting plant, animal and human health in the EU, food safety and SPS controls are applied in a minimally trade disruptive manner.
In the face of repeated violations of EU food safety standards in both poultry and beef imports from Brazil (9), pressure has been mounting for the EC to de-list a range of Brazilian production facilities where non-compliance problems have been identified. As early as the beginning of March 2018 EC officials from the Health and Food Safety Directorate confirmed ‘a draft commission regulation on the delisting of certain third country establishments’ had been submitted to EU member states on the 28th February 2018. This proposal recommended the delisting of ‘certain Brazilian establishments from which imports of products of animal origin are currently authorised’ on the basis of ‘deficiencies recently detected in the Brazilian official control system’.
It was this recommendation which was subsequently confirmed in April 2018 when EU member states ‘voted in favour of removing 20 Brazilian meat and poultry plants from the European Union’s list of authorized EU suppliers’. These measures will become applicable after publication in the EU official journal (2). While for commercial reasons the EC declined to name the specific production facilities affected, earlier reports from agriland.ie had revealed concerns focused on ‘three plants owned by global meat giant JBS; three owned by Brazil’s third-largest pork and poultry processor Aurora Alimentos; and another leading Brazilian poultry establishment’ (1).
The de-listing means consignments imported from these plants into the EU will be rejected at the port of entry. The affected firms have no right of appeal, with firms now needing to ‘comply with EU standards and build a track record of compliance’, after which approval for export to the EU may once again be granted following EU inspections (6).
However the timing of the EC’s decision to more rigorously enforce food safety and SPS inspection requirements cannot be divorced from the political pressure the EC is facing around the proposed expansion of TRQ access for beef in the Mercosur negotiations. This issue is seen as essential to the conclusion of the EU-Mercocur negotiations (see companion epamonitoring.net article ‘EC Asserts EUs TRQ approach to Mercosur Beef Access Request Protects Sensitive Sectors’, 5 April 2018) and involves an increase in the beef TRQ offer to Mercosur from 70,000 tonnes to 100,000 tonnes per annum (already up from an initial 40,000 tonnes offer).
It is against the background of these on-going trade negotiations that EU farmer’s leaders, led by Ireland, are arguing ‘food imports to the EU must fully meet EU standards in relation to food safety and the environment in particular’ (1).
Not surprisingly Brazilian exporters have condemned the EU decision as ‘protectionist’ and have rejected the public health grounds on which the delisting has occurred. Brazil’s Minister of Agriculture, Blairo Maggi claimed the EU decision ‘constitutes a trade war’ and committed the Brazilian government to appealing the EU decision in the WTO, with the aim of allowing a resumption of exports from all Brazilian plants previously approved.
It was claimed by the Brazilian government that exports from the facilities where infringements had been identified had already been suspended and the Brazilian authorities were setting remedial measures in place (4). Brazilian officials claim there is no evidence that any poultry meat exports from Brazil ‘were damaging to human health’ (6).
In the face of the controversy around health standards of Brazilian poultry imports into the EU in 2017 were down 20.5% compared to 2016 (from 504,796 tonnes to 401,465 tonnes) and down a further 48% in January and February 2018 compared to January and February 2018 (from 86,273 tonnes to 45,126 tonnes) (5).
Press reports noted how the EU decision followed demands from Copa-Cogeca for stricter measures against Brazilian exporters following the discovery in 2017 of fraud cases in the Brazilian meat industry involving ‘falsified export certificates and ignored veterinary requirements’. Copa-Cogeca claimed that given the regularity of infringements of EU import requirements by Brazilian exporting companies the credibility of Mercosur enforcement capacities was being thrown into question, with these raising serious issues in the context of the ongoing EU-Mercosur trade negotiations (6).
In its press release welcoming the EC suspension of 20 Brazilian meat exporting establishments the EU farmers organisation Copa-Cogeca urged ‘the EU not to give any further concessions on sensitive agriculture products in return for gains in other economic sectors in the trade talks with the Latin American trade block Mercosur’ and claimed the ‘current EU offer is already unrealistic and seriously endangers the EU’s agriculture sector’ (7). Meanwhile the Irish Farmers’ Association called on the EU Trade Commissioner to ‘pull the plug on any additional beef imports in the negotiations’ with Mercosur, given the continued failed of Brazilian exporters to comply with EU standards. It was claimed that ‘for the last 18 years the Brazilians have consistently failed to meet EU standards on the critical issue of traceability, food safety, animal and plant health, environment and labour standards’ (8, 10).
Irish farmer leaders claimed that ‘with Brexit the EU beef market would be 116% self-sufficient and that to negotiate a trade deal with Mercosur at this time made no sense whatsoever’ (8).
Mercosur Beef Exports to the EU 2013-2017
| 2013 | 2014 | 2015 | 2016 | 2017 | |
| Brazil | |||||
| 0201 (fresh & chilled) | 24,301 | 26,520 | 25,596 | 25,902 | 22,962 |
| 0202 (frozen) | 41,568 | 40,557 | 39,605 | 39,793 | 33,623 |
| Total Beef | 65, 869 | 67,077 | 65,201 | 65,695 | 56,585 |
| Argentina | |||||
| 0201 (fresh & chilled) | 32,270 | 29,164 | 30,091 | 31,826 | 37,032 |
| 0202 (frozen) | 2,261 | 2,223 | 1,908 | 1,467 | 1,292 |
| Total Beef | 34,431 | 31,387 | 32,999 | 33,293 | 38,324 |
| Uruguay | |||||
| 0201 (fresh & chilled) | 19,481 | 21,683 | 21,982 | 24,743 | 26,486 |
| 0202 (frozen) | 20,079 | 15,901 | 13,613 | 13,906 | 15,763 |
| Total Beef | 39,560 | 37,584 | 34,595 | 38,649 | 42,249 |
| Paraguay | |||||
| 0201 (fresh & chilled) | – | – | 1,311 | 3,122 | 3,859 |
| 0202 (frozen) | – | – | 161 | 1,453 | 1,462 |
| Total Beef | 1,472 | 4,575 | 5,321 | ||
| Total Mercosur | 139,860 | 136,048 | 134,267 | 142,212 | 142,479 |
Source: EC Market Access Data Base http://madb.europa.eu/madb/statistical_form.htm
| Note: Out of quota beef imports face levies of between €2,700–€4,700 per tonne (with an average tariff equivalent levy of approximately 87.5%), while the tariff imposed on the multilateral TRQ for EU beef imports(known as the Hilton beef quota is 20%, while a smaller additional duty free quota at the multilateral level has been established (11). |
| Comments and Analysis The suspension of imports of poultry meat from 20 Brazilian establishments reflects the growing importance of food safety and SPS issues in exports to the EU. The fact that Brazil, the world’s leading poultry meat exporter, struggles to consistently comply with EU standards puts into perspective the challenges routinely facing ACP exporters, who given their size, often lack the financial means to meet evolving standards on a commercially viable basis. The debate around the application and enforcement of EU standards (whether food safety, SPS, environmental or labour standards) in the context of on-going trade negotiations highlights how politically charged seemingly technical decision making can become. This is particularly significant within consensus based processes of decision making, such as those which prevail in the EU, where the interests of 27 member states need to be taken into account in all EC decision making. EU farmer’s fears over the impact of a free trade deal with a group of competitive agro-food exporting nations (Mercosur) are being heightened by fears over possible Brexit related disruptions of existing intra-EU agro-food sector trade flows, with these being particularly acutely felt in Ireland. This can only serve to heighten the political temperature of any discussions around the structure and implementation of EU trade policy. In an ACP context, the absence of any right of appeal beyond recourse to the WTO which the current EU-Brazil dispute highlights suggests a need for strengthened consultative and appeals mechanisms around the application of food safety, SPS, environmental and labour standards, in order to ensure the application of trade restrictive mechanisms, is kept to a minimum. This is particularly the case where European Commission decision making can have major impacts on agro-food sector trade flows highlighted in the current Brazil-EU dispute. In an ACP context this issue is likely to come to the fore in the coming 18 months as the EC begins to move ahead with the application of its new plant health regulation (see epamonitoring.net companion article ‘New EU Plant Health Regulation Could Carry Important Implications for Smaller Scale ACP Exporters’, 6 November 2017). This suggests a need for ACP governments to use the pending post-Cotonou negotiations to launch a debate on the strengthening of consultative mechanisms within trade agreements with the EU on the EC’s application of SPS, food safety, environmental and labour regulation (with particular emphasis on SPS and food safety controls). This could even go so far as to open discussions on the establishment of an independent dispute resolution mechanism in regard to the design and application of EU SPS and food safety controls. However such an ACP dialogue with the EU would have to be based on the pro-active engagement of ACP SPS and food safety institutions and officials in preparing ACP inputs into such discussions. These inputs would need to be strongly science based, but would also need to recognise that how controls are designed and applied can carry major trade consequences, particularly for smaller scale exporters such as those that are numerically dominant within the ACP. Unfortunately current institutional arrangements for such practical coordinated engagement are under developed within ACP structures, with the possibilities for coordinated dialogues using IT systems to connect SPS and food safety officials across the ACP being under-utilised. This could potentially build on established EU and member states supported programmes to strengthen SPS capacities across the ACP, for example the EU financed EDES – Strengthening Food Safety Systems through SPS measures programme – which seeks to strengthen capacities in 50 ACP countries (12). The ACP Group would appear to be an appropriate level for such engagement given the small size of most ACP economies and the difficulties faced by even global agro-food sector trade giants, such as Brazil, in ensuring the existence of effective dialogue structures around the design and application of EU food safety and SPS controls. |
Sources:
(1) agriland.ie, ‘7 Brazilian meat plants to be delisted by the EU’, 5 March 2018
http://www.agriland.ie/farming-news/seven-brazilian-meat-plants-to-be-delisted-by-the-eu/
(2) agriland.ie, ‘European Commission delists 20 Brazilian meat plants’, 19 April 2018
https://www.agriland.ie/farming-news/european-commission-delists-20-brazilian-meat-plants/
(3) Foodnavigator.com, ‘Brazil plans WTO appeal in trade was EU bans poultry imports’, 20 April 2018
https://www.foodnavigator.com/Article/2018/04/20/Brazil-hits-back-at-EU-ban-on-poultry-imports-from-20-plants
(4) Globalmeatnews.com, ‘Brazil-appeals-over-blocked-poultry-imports’, 19 April 2018
https://www.globalmeatnews.com/Article/2018/04/19/Brazil-appeals-over-blocked-poultry-imports
(5) EC, ‘EU Market Situation for Poultry’, Committee for the Common Organisation of the Agricultural markets, 19 April 2018
https://circabc.europa.eu/sd/a/cdd4ea97-73c6-4dce-9b01-ec4fdf4027f9/24.08.2017-Poultry.pptfinal.pdf
(6) Foodindustrymag.com, ‘Brazil unhappy as European Commission drafts ban on meat exports’, 23 April 2018
https://foodindustrymag.com/brazil-unhappy-as-european-commission-drafts-ban-on-meat-exports/
(7) Copa-Cogeca, ‘EU move to suspend imports from 20 Brazilian meat plants supported’, 24 April 2018
http://www.copa-cogeca.be/Main.aspx?page=Archive
(8) Globalmeatnews.com, ‘IFA warns against Mercosur deal increases’, 24 April 2018
https://www.globalmeatnews.com/Article/2018/04/24/IFA-escalates-Mercosur-fight
(9) AHDB, ‘EU Beef Imports’, 29 March 2017
http://beefandlamb.ahdb.org.uk/market-intelligence-news/eu-beef-imports/
(10) Copa-Cogeca ‘The agricultural impact of an EU-Mercosur agreement’
www.copa-cogeca.be/Download.ashx?ID=941661
(11) tradebetablog, ‘The Hilton beef quota: a taste of what post-Brexit UK faces in the WTO’, 10 August 2016
https://tradebetablog.wordpress.com/2016/08/10/hilton-beef-quota/
(12) COLEACP, ‘EDES – Strengthening Food Safety Systems through SPS measures’
https://www.coleacp.org/en/nos-programmes/edes