Effect of trade deals on beef exports

Recent trade agreements between EU/MERCOSUR and EU/USA have an impact on beef exports from Uruguay to the EU.

When talking about EU beef quotas, the two that get most mention are the high quality beef (HQB) quota, also known as the Hilton quota, and the autonomous beef quota, known as the ‘EU 481 grain fed quota’. The new deal between EU and MERCOSUR offers new quota for beef farmers for 99,000t/year of hormone-free beef from Brazil, Argentina, Uruguay and Paraguay.

Mercosur members will be allowed to export 99,000 metric tons of beef to Europe under a tariff rate of 7.5%. That tonnage is measured in carcass weight equivalent, which includes fat and bones. In meat-only terms, that is about 67,000 tons in net weight. In addition to that: 20% duties will be eliminated on premium steaks (Hilton quota).

In comparison, the current regime allows 200,000 tons to be exported to the EU (of which 45,000 at a tariff of 40-45%), while Mercosur produced around 14,100,000 tons in 2018 and exported about 3,400,000 tons. The duty-free quota increase under the Mercosur-EU agreement therefore represents an increase of approximately 3% in overall Mercosur bloc exports.

However, the recent US/ EU agreement to increase imports of grain-fed beef meant that Uruguay, Argentina and Australia will have to give up their quota within the 481 regime.  The autonomous ‘EU 481 grain fed beef’ quota was set up to resolve a hormone use dispute between the EU, US and Canada. Currently the quota is set at 45,000 tons product weight, which is shared between Australia, New Zealand, Uruguay, Argentina, Canada and the US on a first-come first-served basis. The tariff on product under this quota is zero rated, and the quota is usually filled quickly.

In brief, elimination of levies for Hilton beef quota, elimination of grain-fed beef quota and new quota for fresh and chilled beef. Tariffs on beef imported into the EU outside of quotas remain very high, with some cuts having a tariff over 80%. Minor increase in total beef volume and mainly shift from grain-fed to grass-fed beef.

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