EU-Mercosur Agreement: Old pledges, new potential impacts for food systems and a just transition
IATP | 20 Febraury 2025
EU-Mercosur Agreement: Old pledges, new potential impacts for food systems and a just transition
by Maureen Santos
Maureen Santos is an ecologist and political scientist, currently serving as coordinator of the Politics and Alternatives Unit at FASE – Solidariedade e Educação, professor at the International Relations Institute and coordinator of the Socioenvironmental Platform research program at the BRICS Policy Center think tank. She is based in Brazil.
International trade has recently regained significant attention in civil society and global media discussions due to a series of events moving in opposite ways but with potential results that point in the same direction: negative impacts on food systems and socio-environmental protection, delaying the path towards a just and inclusive transition.
The trade war waged by the U.S. government under President Donald Trump shortly after he took office has raised concerns about rising food prices and cast doubt on the already weakened World Trade Organization (WTO). At the same time, the conclusion of the European Union-Mercosur Agreement (EUMA) negotiations, despite long and strong advocacy campaigns by civil society organizations in Brazil and other Mercosur countries, as well as from European groups, has raised alarms about the significant setbacks for public policies protecting food and nutritional sovereignty, as well as the rights and protection of forests and their peoples.
This article will focus briefly on some of the implications on the final EUMA text negotiated between 2023 and 2024 called the Brasília Package[1], indicating certain geopolitical aspects and how Brazilian civil society advocacy influenced some changes, especially related to procurement measures and market access, while remaining strongly critical about the overall agreement.
Despite Mercosur government representatives recognizing the “neocolonial” nature of the agreement, which involves exchanging commodities for high-value industrialized products with limited practical gains for the South American countries, geopolitical and economic factors ultimately led to its approval. The agreement consists of 20 chapters, though a complete, numbered, and titled final version is not yet available.[2] In addition to the chapter on trade in goods, it includes chapters on government procurement, services, sustainable development, intellectual property, sanitary and phytosanitary measures, and rules of origin, among others. The last round of negotiations added rules for dispute settlement, including a rebalancing mechanism; collaboration to support multilateral rules for labor and sustainable development;[3] and a binding commitment to uphold the Paris Agreement and United Nations Framework on Climate Change (UNFCCC) identifying that each country member shall remain a Party as an essential element[4] of the EU-Mercosur treaty.
During this period, Brazilian diplomatic efforts focused on preventing the Agreement from undermining Brazilian industrialization, as well as on blocking new technologies, such as those related to Artificial Intelligence, that Brazil may wish to develop itself. Furthermore, Brazil’s central argument, especially as a Mercosur country that has been most interested in concluding negotiations recently, was that the economic and political crises triggered by wars in Europe and the Middle East, along with the new Cold War between the United States and China, left Brazil in a highly unbalanced situation due to their dependency on trade with China. Currently, China is Brazil’s largest export partner, accounting for about one-third of its exports, followed by the United States. This has been the case since 2018.
Several important changes are worth mentioning in the final text. For instance, one of the advocacy focuses from civil society related to public procurement programs such as the Food Procurement Program (Programa de Aquisição de Alimentos, PAA) and the National School Feeding Program (Programa Nacional de Alimentação Escolar, PNAE) are reportedly excluded from the Agreement. As indicated by the exceptions outlined in a paragraph of the Brazilian offers: “Public procurement of goods and services purchased under food and nutritional security and school feeding programs that support family farmers or family farming cooperatives carrying specific registration, according to national legislation.”
However, a statement published by the Brazilian coalition against the EU-Mercosur Agreement (Frente Brasileira contra o Acordo União Europeia-Mercosur), a national coalition created in 2020 to pressure against the signing of the agreement, indicates that, despite some demands being incorporated into the annexes of the final version, the Agreement still contains significant problems. There are concerns related to insufficient environmental guarantees and food systems, such as the lack of control over pesticides and the expansion of the agribusiness trade frontier, as the Agreement provides for the total or partial liberalization of 99% of Brazilian agricultural exports to the European market. It will intensify disparities with family farming production and increase soybean and corn production to attend the new exports demand, reflecting that asymmetrical and unequal content, denounced by CSOs organizations, remain unchanged. The oldest national network dedicated to monitoring and advocacy against free trade agreements, the Brazilian Network for the Integration of Peoples (Rebrip), argues that the Agreement cannot be fixed, as its origin goes back more than two decades, and its current framework remains largely unchanged from the original structure. For Rebrip, “agribusiness and mining will become even stronger, precisely the sectors most harmful to the environment and most associated with rural violence.”
Despite concerns raised by Indigenous peoples, environmental, family farm and other networks defending the Amazon and the Cerrado — Brazil’s ecologically rich regions that are home to Indigenous peoples and traditional communities — the last round of negotiations did nothing to limit the trade measures that encourage a dramatic expansion of exports. The expansion of quotas for beef, poultry, ethanol, and other products, whose production is a major driver of deforestation as well as the largest contributor to Brazil’s greenhouse gas emissions (GHG), continues. The unequal production model, based on large-scale livestock and soybean monoculture, for example, lies at the heart of land conflicts, threatening the rights of Indigenous peoples, traditional communities, and peasant farmers.
In recent years, under pressure by civil society, the private sector and parliamentarians, the European Union has implemented stricter policies to address environmental issues in their exports and has introduced a series of regulations. Among these are the Corporate Sustainability Due Diligence Directive (CS3D or CSDDD), the Carbon Border Adjustment Mechanism (CBAM) and the EU Deforestation Regulation (EUDR). These EU regulations demand better transparency and accountability in operations and supply chains, with significant implications for exporting markets like those of Mercosur countries. For example, in the CSDDD, corporations with more than one thousand employees and global revenues exceeding 450 million euros will need to audit their supply chain related to practices such as illegal deforestation and implications for biodiversity loss, as well as crimes such as child and forced labor.
In this context, and given that the regulations were seen as protectionist by Mercosur countries, the final text of the Agreement was approved after three key commitments were made. The first is a package of flexibilities, which includes a formal commitment by the EU to the Mercosur countries to provide financial mechanisms such as loans, grants and technical cooperation to support adaptation of economic actors and full access to EU-LAC Global Gateway Investment Agenda within Cooperation Protocol. The second is the postponement of implementation of the EUDR, which will allow more time for companies to develop appropriate monitoring mechanisms. Finally, a legally binding rebalancing mechanism inside Dispute Settlement chapter points out that the mechanism could be “activated when one party’s unilateral measures affect the use of trade concessions agreed between the two blocs. This means that the other party can initiate mediation, escalate to a dispute settlement panel, and take corrective measures.”
The new Rebalancing Mechanism could potentially undermine the effects of EU regulations, as it allows for the activation of a dispute settlement mechanism over measures that change the balance of concessions made at the time of the signing of the agreement. This includes mediation, panels, and corrective measures, which would provide for compensation if unilateral actions by one party affect the trade concessions agreed upon between the two blocs. EU officials argue that the scope is based on WTO rules and does not apply to regulations that have already been adopted. However, a new annex titled Definition of Measures references laws that are not yet implemented at the time the negotiations are concluded (such as the EUDR). This could create new pressures to prevent future environmental and other public interest laws on both sides of the Atlantic.
In this regard, it is hard to believe that free trade agreements could offer benefits for climate or socio-environmental policies, as they promote the primacy of market access at any cost. The EU-Mercosur Agreement exemplifies this, as despite continuing with the narrative that it ensures environmental clauses and climate commitments, in practice it implements measures that could divert means and resources that could otherwise be used for a genuine, just, ecological and inclusive transition.
Footnotes
[1] In 2019, both blocs announced the approval of the “political agreement association”, although some chapters were still open. The 2023-34 final version included all texts and new annexes, for example, Annex X.X that include commitments on multilateral regimes, climate change and obligations on Paris Agreement of UNFCCC as “essential element”. See in Brasilia Package.
[2] The available texts come with this disclaimer on this.
[3] In the new annex of the Trade and Sustainable Development chapter, an item labeled A.2 on Multilateral Regimes has been included. This topic is particularly relevant as it now references all multilateral commitments related to the International Labour Organization (ILO) such as 169 Convention (about free, previous and informed consultation) and environmental agreements.
[4] “In this context, recognizing the role of trade in contributing to the response to the urgent threat of climate change, each Party shall remain a party, in good faith, of the UNFCCC and its Paris Agreement.” This sentence is considered an essencial element of the Agreement.
