Post Segments
Nothing better explains why the UK should NOT dynamically align its agricultural regulations with the EU than the EU’s current dilemma of convincing (bribing, actually) its farmers to accept its trade deal with Mercosur. Add to this the EU’s third attempt to get an Australian trade deal over the line, and it is clear why the UK should resist the siren voices of dynamic alignment, which claim “it would help UK agrifood exports”. Oh no, it wouldn’t. The EU has no interest in importing food from anywhere – even from the world’s most efficient producers.
The EU-Mercosur deal (Argentina, Brazil, Bolivia, Paraguay, Uruguay, and Venezuela (membership currently suspended)) was signed on 17 January 2026 after 25 years of negotiations. It still requires ratification by the European Parliament and national legislatures. In the Council of the EU, the agreement was approved by Qualified Majority Voting (QMV) and passed despite opposition from France, Poland, and Ireland.
Why is Ireland against these trade deals?
Irish beef prices are well above those of Brazil, Argentina, Uruguay, Paraguay and Australia, five of the world’s top beef exporters. Irish beef prices are 88% higher than the average Mercosur beef price, double the Australian price and 116% higher than the Brazilian price. (All prices are for R3 Steers’ deadweight.)
Brazil and Australia have vast landmasses relative to their populations and are both large, efficient beef producers and exporters. By contrast, Irish and other EU farmers are being encouraged (forced?) to reduce their beef and dairy herds to meet nitrogen and greenhouse gas emission targets. So why wouldn’t the EU embrace imports to lower its farm emissions without increasing its cost of living or lowering its living standards? It has had no trouble doing so when importing manufactured goods from China. Importing beef from South America and Australia would halve EU beef prices and lower EU agricultural-related emissions. What’s not to like?
But neither the EU’s trade agreement with the Mercosur countries nor the EU’s possible agreement with Australia will benefit EU consumers by lowering beef prices. Brussels has no interest in helping its consumers. Instead, it has limited beef imports from Mercosur countries to a tiny quota of 99,000 tonnes, shared among Brazil, Argentina, Paraguay, and Uruguay. These four countries are also 4 of the world’s 7 largest beef exporters. Only Bolivia and suspended Venezuela, both Mercosur countries, are NOT on the world’s top beef exporters list. Together, these four Mercosur countries exported about 7 million tonnes of beef in 2024. For Uruguay, beef is its largest export, accounting for almost a quarter of total exports. Not that the EU cares about trade as aid for less developed countries. Brussels has no interest in ‘free’ trade. Three-quarters of all EU tariffs go towards funding Brussels bureaucrats and their lavish lifestyles.
To emphasise that the EU is a Customs Union and not interested in importing anything, even from the world’s most efficient producers, this tiny beef quota must be divided among all 450 million EU consumers. That works out to about 220 grams per person per year! One meal a year, max. And this beef won’t be imported tariff-free; it will be subject to a reduced tariff of only 7.5%. But to make sure EU consumers don’t choke on this mouthful of beef by consuming it too quickly, the reduced tariff rate quota will be gradually introduced over many years.
However, while EU consumers will not benefit from this trade deal, EU farmers will be protected (as usual): first, by the very small quotas and retained tariffs; second, by additional subsidies in the EU’s next budget to compensate farmers for any rise in Mercosur imports.
The European Commission pledged €45 billion in early-access funds for farmers under the next EU budget (2028–2034). It was presented as “unprecedented support” for rural communities and intended to ease fears of being undercut by cheaper South American imports. This is in addition to the Commission’s guaranteed €293.7 billion for agriculture in the upcoming seven-year budget, and it proposed a €6.3 billion crisis fund to cushion farmers against market shocks.
Brussels has also tightened its import ‘safeguards’, which allow it to suspend imports of agricultural products if they are too competitive. It has lowered its Maximum Residue Levels for pesticide residues on imported agrifood goods and has committed to ensuring ‘reciprocity’ with EU health and environmental regulations.
The Mercosur deal was only pushed over the Qualified Majority Voting line by convincing Italian farmers that the EU would back away from its plans to cut farm subsidies in the upcoming EU budget, and instead maintaining agricultural subsidies will be a priority in the new EU budget.
The EU UK Reset: sleight of hand or confused logic?
Why is the UK so keen to allow the EU to set UK food standards and agricultural regulations? This Reset will not increase UK agrifood exports to the EU. The EU doesn’t even want to buy agrifoods from cheap, efficient producers; it’s even less likely to buy them from expensive UK producers. All the Reset will achieve is to make it easier for EU companies to export their relatively expensive food to the UK and to keep out cheaper food from other countries. Meanwhile, UK farmers will have to compete with EU farmers receiving CAP and Compensation subsidies for allowing a tiny amount of Mercosur beef into the EU market.
British farmers would not be protected or compensated if we allowed Brussels to set UK agricultural regulations and food standards, or worse, if we joined a Customs Union with the EU. But Brussels could use its regulatory power to prevent the UK from importing cheaper beef from Australia, New Zealand, Mexico, Chile, Canada and the US, even though we have trade agreements with these countries that include beef imports.
EU-subsidised farmers can already undercut UK farmers, and with their additional Mercosur compensation, this will be even easier. EU beef is also much more expensive than imports from Australia, New Zealand, Canada, Mexico, Chile or the US. So UK consumers miss out, but so do UK farmers.
The worst of all possible worlds…
If you are a farmer living in a seat represented by a Liberal Democrat MP, explain to them how the EU’s Mercosur trade deal would harm UK farmers without benefiting UK exporters if we were to follow Ed Davey’s foolish dream of joining an EU Customs Union.
The EU-Australia Trade Agreement
Like the Mercosur trade deal, the EU’s trade deal with Australia has taken some time. Negotiations began in June 2018, two years before the UK-Australia trade negotiations began. The UK-Australia trade agreement was negotiated, ratified, and entered into force in May 2023. The EU is still negotiating its Australian trade deal. This will be the 8th year!
Like the Mercosur deal, the Australian-EU trade deal is similarly stingy on Australian beef and lamb. EU consumers will be limited to tariff-free imports of only 24,000 tonnes of Australian beef (53g per person per year) and 20,000 tonnes of Australian lamb (44g per person per year).
It is hard to fathom why the Australians are bothering. The EU also wants them to ‘obey EU laws’ and change the names of their feta cheese, prosciutto, prosecco, and any other product name the EU believes it ‘owns’. (If only the English had thought to copyright their language. We could ban the EU from using so many manufacturing terms.) Despite its arrogance, the EU desperately needs Australian raw materials, rare earths, and critical minerals to continue manufacturing its automotive, aircraft, and defence equipment.
Australian tariffs on EU-manufactured goods are low; so they should not let the EU bully them. The EU hardly buys any Australian goods, despite its market of 450 million people compared with Australia’s 25 million. Australia imported EU goods worth US$42 billion in 2024, most of which were machinery, vehicles, electronic machinery, and pharmaceuticals. Meanwhile, the EU imported Australian goods worth only US$11 billion, mainly mineral fuels (coal) and oilseeds (rape), both of which are tariff-free in the EU.
Australia should understand by now that the EU does not want to buy goods from anyone; it only wants to sell goods. This trade agreement will not increase Australian exports to the EU beyond raw materials, which are already tariff-free in the EU; it will simply force Australian manufacturers to change their product names and comply with EU rules.
But why is the UK still buying so much Irish beef?
There are rumours that the UK is being ‘flooded with Australian beef’ that really should be true, but isn’t. This year, the UK will be able to import up to 60,000 tonnes of beef from Australia tariff-free (less than 1 kilo per person per year). In 2024, the UK could have imported 43,333 tonnes of Australian beef, but it only imported about 5,249 tonnes, about an eighth of the tariff-free quota for that year. Instead, the UK bought 129,000 tonnes of chilled beef and 57,000 tonnes of frozen beef from Ireland. Australian R3 steer deadweight prices started 2024 at 2.7€/kg and ended the year at 3.7€/kg. In contrast, the Irish price went from 5.05€/kg to 5.64€/kg. The UK really should have been ‘flooded’ with Australian beef, but it wasn’t.
In 2025, Irish beef prices were even higher. Irish beef prices briefly exceeded UK prices in 2025 and have remained very high since. The total cattle throughput at Irish meat plants is estimated to have decreased by 180,000 head in 2025. Demand for Irish beef exports has increased as other EU countries are also reducing their herds to meet EU-mandated cuts in nitrogen emissions. Dutch livestock farmers were told to reduce their herds by one-third over eight years, with buyout schemes and relocation incentives for farms near protected Natura-2000 areas. This was part of a €25 billion programme to tackle the country’s “nitrogen crisis”, which breaches EU environmental law. Although farmer protests prevented compulsory buyouts, the EU approved voluntary schemes in 2023. Germany and France implemented environmental obligations under the EU Green Deal, alongside plans to reduce tax breaks for diesel. Farmers faced growing compliance costs for emissions and nitrates regulations, prompting herd reductions and protests over shrinking margins and climate policies. The EU dairy herd fell to its lowest level in decades in 2024, down 3.4% year-on-year, with Germany losing 123,000 cows, France 91,000, and the Netherlands 30,000. Dairy farms are a source of calves for many EU beef producers.
Will UK farmers also have to adopt these environmental obligations under the EU Reset? It is hard to imagine the EU allowing UK farmers to compete with EU farmers if they didn’t have to follow the same production restrictions.
Chart below from Bord Bia
So why is the UK still buying 30% of the beef it consumes from Ireland?
There is another problem. Ireland not only supplies about 30% of the million tonnes of beef the UK consumes each year but Irish-owned processors such as ABP Food Group, Dawn Meats (including Dunbia JV), Kepak, and Foyle Food Group that collectively dominate the UK beef processing sector. Irish-owned abattoirs process more than half of UK beef, making them the most influential group in the UK beef supply chain, according to the UK Competition and Markets Authority (CMA). ABP alone operates several large UK plants and is considered one of the top two processors in the UK market. Dawn Meats and Kepak also have extensive UK operations, including abattoirs and meat-packing facilities. Irish processors maintain strong partnerships with Irish farmers and operate extensive processing facilities in both Ireland and the UK, enabling them to move Irish beef efficiently across borders to meet UK retail and foodservice demand.
You can take the country out of the EU, but you can’t take the EU out of the country’s supply chains so easily. UK consumers should expect their beef prices to continue rising despite the new trade deals.
Catherine McBride is an economist specialising in trade. She was a member of the UK’s Trade and Agriculture Commission from 2021 to 2024. This article is reproduced from Catherine McBride’s Substack.
