Long-standing concerns, particularly regarding deforestation in the Brazilian Amazon, have created obstacles to concluding the EU-Mercosur political agreement.
The EU-Mercosur (*The Southern Common Market, known by the Spanish acronym Mercosur and Portuguese Mercosul, is a South American trade bloc established by the Treaty of Asunción in 1991 and the Protocol of Ouro Preto in 1994. Its full members are Argentina, Brazil, Paraguay and Uruguay. Venezuela is a full member, but its participation has been suspended since 1 December 2016. Associated members are Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, Suriname and Chile) agreement is a priority for the European Union and the upcoming Spanish Presidency of the EU Council ahead of the summit with Latin American and Caribbean countries, which will take place in Brussels on 17 and 18 July.
Can negotiations for such a controversial and outdated trade agreement be completed by the meeting scheduled for mid-July? Hopes in Brussels are high, but the talks could still fall apart.
“Concluding the EU-Mercosur agreement will bring the two regions together in a mutually beneficial partnership,” Trade Commissioner Valdis Dombrovskis told reporters on 7 June, as he presented a renewed agenda to boost relations with Latin America.
EU relations with the region have hampered progress on the Mercosur agreement
After nearly 20 years of negotiations between Mercosur countries (Brazil, Argentina, Uruguay and Paraguay) and the EU, a trade deal between the two regions was reached in 2019. However, persistent concerns regarding sustainability, particularly in relation to deforestation in the Brazilian Amazon, have hindered the finalisation of the political agreement. In addition to this, V. Dombrovskis acknowledged that there are also concerns expressed by Mercosur countries regarding the impact of the European Green Deal on them.
According to French Green MEP Yannick Jadot (Yannick Jadot), the Green Deal is seen as “a form of neocolonialism by which Europe imposes its agenda on climate, forests and people”.
Sustainability instrument
The European Union has submitted an additional “sustainability instrument” to Mercosur countries to make environmental protection a condition for completing the trade deal. However, the Brazilian government previously condemned the European regulations as “very strict”, reports AFP. The EU is now awaiting Mercosur's response to the proposed measure, as negotiators from both sides are set to meet at the end of June in an attempt to reach an agreement.
European Commission President Ursula von der Leyen (Ursula von der Leyen) will travel to Brazil, Argentina, Mexico and Chile to present the new agenda for renewed EU-regional relations, and the Mercosur agreement is expected to be one of the main topics.
In the first week of June, Brazil's left-wing President Luiz Inacio Lula da Silva (Luiz Inacio Lula da Silva) stated that his government would not sign the agreement without adjustments to public procurement rules, as the deal would allow EU and Mercosur companies to participate in public sector procurement tenders as “local” companies. However, the EU Commission warned against reopening negotiations.
“The Commission's general recommendation is not to reopen the agreement. Negotiations for it have been going on for a very long time,” said Dombrovskis. “If we reopen it now, we will disrupt this economic balance, which could again lead to long negotiations with an uncertain outcome”.
Last year alone, the EU's trade volume with Mexico and Mercosur countries stood at 240 billion euros, accounting for 65% of the total trade volume with this region, the Commission points out.
“Strategic necessity”
Any success in the negotiations would be particularly significant in the context of the Spanish Presidency of the EU Council, which begins in July.
But even if a political agreement is reached by mid-July, the ratification process for the Mercosur agreement will be long and complex.
“It will be possible to prepare a joint political declaration by July. However, the ratification process remains unclear. If unanimity is required, that could be complicated,” Mathilde Dupré, director of the Veblen Institute in France, told EUobserver.
While Spain, with the support of Germany and Portugal, is calling for the swift conclusion of negotiations, countries such as France have taken a stand against the ratification of the free trade agreement. The national parliaments of Austria and the Netherlands have also expressed concerns about the climate impact of the trade deal.
Although Mercosur negotiations remain complex and difficult, the upcoming EU-CELAC [Community of Latin American and Caribbean States] summit is also seen as a geopolitical opportunity to renew relations with the region after years of estrangement. The last EU-CELAC summit was held in 2015.
“In the current geopolitical context, strengthening the partnership between the EU and Latin America and the Caribbean is a strategic necessity,” emphasised EU foreign policy chief Josep Borrell (Josep Borrell), noting that this partnership has sometimes been “taken for granted” or even “neglected”.
Deforestation and pesticide problems
Meanwhile, a study commissioned by the Greens in the European Parliament on Wednesday revealed that the Mercosur agreement and an increase in meat exports could trigger deforestation covering between 620,000 hectares and 1.35 million hectares.
“If further sugar production and ethanol production are encouraged in Mercosur, producers will occupy more and more land, especially permanent grasslands, and this will, of course, (...) also contribute to deforestation,” said one of the study's authors, Baptiste Buczinski (Baptiste Buczinski). Furthermore, researchers estimate that beef exports could increase by 23 to 56 percent, creating an uncompetitive environment for European livestock farmers.
The agreement will increase trade volumes, but it will also have a negative impact on healthcare and climate pollution, as the use of pesticides and antibiotics will increase, warned Buczinski.
Similar concerns were echoed by Belgian MEP and Greens group representative Saskia Bricmont (Saskia Bricmont), who pointed out that Brazil uses about 500 pesticides, 150 of which are banned in the EU, increasing the risk of products with residues of these pesticides being imported into the EU.
“There is no precautionary principle in the agreement,” warned S. Bricmont, adding that products imported into the European Union must comply with EU legal standards.