Sao Paulo — A trade deal between the EU and South America’s Mercosur bloc of countries could facilitate other agreements and open up new markets for Brazil’s huge beef-packing industry, a trade group says. 

Speaking after Brussels and Brasília announced an agreement to reduce barriers on industrial and farm products, Antônio Camardelli, head of Brazil’s Abiec beef association, said the deal could pave the way to negotiating access to new markets or expanding trade with existing partners.

“A deal of this magnitude is like an invitation card for speaking with other countries and trade blocs,” he said.

He mentioned Indonesia and Thailand as prospective new markets for Brazil, the world’s biggest beef exporter with sales of about $7bn in 2018.

Though Europe is not Brazil’s largest buyer, it is the country’s best-paying customer for some prime beef cuts, Camardelli said.

The deal boosts the prospects for more Brazilian beef sales to the EU, as it commands a 42.5% share of the new 99,000 ton annual quota for beef exports to EU member countries that will be assigned to Mercosur, he said. Tax on the new quota will be 7.5%.

The annual quota is for Argentina, Uruguay and Paraguay as well as Brazil.

The new trade terms, once implemented, would also reduce to zero from a 20% levy on beef imports into the EU under the so-called Hilton quota. That quota allows Brazil and Argentina to each export up to 10,000 tons of beef and 29,500 tons of prime beef cuts, to the EU every year.

With the exception of the Hilton terms, the EU-Mercosur deal does not change any other EU tariffs, Camardelli said, referring to the levies ranging from 12.8% to 20% that Brazil pays to sell beef into the EU under other existing quotas still in place.

But Camardelli expects the deal will also allow Brazilian sales of lower-value cuts to the EU, which previously higher tariffs discouraged. Such cuts could be bought mostly by EU food processors, he said.

Brazil’s average beef exports into the EU over the past 10 years totalled 120,000 tons per year, according to government data compiled by Abiec.

On Friday, Abiec reiterated overall beef exports are expected to rise 10% both in volume and in financial terms in 2019.