A potential trade deal between the EU and four South American countries could increase Irish exports by more than €1bn.
According to a new report brought to Cabinet, the Mercosur trade deal would also lead to a marginal reduction in Irish beef output.
Irish farmers have expressed concern that imports of beef from Argentina, Brazil, Paraguay and Uruguay will affect their livelihoods.
The Tánaiste and Minister for Enterprise, Mr Varadkar said the independent study of the EU-Mercosur Agreement shows that there are broadly positive, economic effects for Ireland with over €1 billion additional exports generated due to the agreement.
However, he acknowledged that the report also finds that the deal will have a marginally negative impact on the environment in Ireland and the Mercosur countries which cannot be ignored.
Mr Varadkar, warned if the EU does not make the trade deal they might turn to China, the US or UK instead.
Government is now considering the study and decide if Ireland will back the proposed deal with South America.