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EU-Mercosur trade deal: Clashes over agriculture, sustainability persist

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Euractiv | 19 July 2023

EU-Mercosur trade deal: Clashes over agriculture, sustainability persist

By János Allenbach-Ammann

At the margins of the EU-CELAC summit in Brussels on Monday and Tuesday (17-18 July), EU and South American leaders reiterated their ambition to finalise an agreement by the end of 2023, though sustainability and agricultural market access concerns continue to pose challenges.

Negotiations over an association agreement including a comprehensive free trade agreement between the EU and Mercosur started in 2000 and were finalised in 2019. But the agreement with the Mercosur trade bloc, which encompasses Brazil, Argentina, Uruguay and Paraguay, was never signed, with the EU seeking further reassurances regarding sustainability and deforestation.

“Our trade policy has to be consistent with our climate policy,” French President Emmanuel Macron said on Tuesday in Brussels at the margins of the EU-CELAC summit, warning of imported carbon emissions and deforestation.

The EU-CELAC summit unites heads of state and government from the Caribbean, Latin America, and the EU to discuss political and economic cooperation between the two regions.

In 2022, the European Commission presented a new approach for trade and sustainable development chapters in free trade agreements. With this new approach, the EU Commission wants to make sustainability commitments more enforceable, for example by allowing the EU to apply trade sanctions in case a trade partner backtracks on its climate commitments.

While this new approach was accepted by a small country like New Zealand, the Mercosur countries are less enthusiastic about the far-reaching sustainability requirements, particularly the so-called “mirror-clauses” that the French would like to see introduced, seeing them as encroaching on their sovereignty.

A balanced approach

Speaking on Monday, Brazilian President Luis Inácio Lula da Silva called for a “balanced” agreement.

“We would like to have an agreement that will preserve the capacity of the different parties to respond to future and present challenges,” he said.

Lula had stalled EU-Mercosur talks in late June to prepare a counterproposal to an EU text proposal that he found unacceptable.

Nevertheless, Lula still expressed his hope that an agreement could be finalised by the end of the year, a hope echoed by European Commission President Ursula von der Leyen and Spanish Prime Minister Pedro Sanchez.

“We believe that we now have a window of opportunity,” Sanchez said on Monday, speaking of the Spanish presidency of the EU Council that lasts until the end of this year.

On Monday evening, EU Trade Commissioner Valdis Dombrovskis met with the foreign ministers of the Mercosur countries. The readout from the meeting stated that Dombrovskis and the ministers “reaffirmed their determination to work towards the conclusion of the Agreement between the EU and MERCOSUR by the end of 2023 and to resolve all outstanding issues in accordance with the priorities and concerns of each party.”

Resolving all outstanding issues will be challenging, however, as the EU countries that are most critical of the agreement – France, Ireland, Austria and the Netherlands – have strong agricultural lobbies that fear the influx of cheap South-American beef.

These agricultural interests are why critics, such as Brazilian President Lula, say that the sustainability concerns of national EU governments are mostly a way to disguise their protectionism.

Meanwhile, the German government is strongly in favour of concluding an agreement, as is the EU’s main business lobby BusinessEurope.

The European Parliament could pose another hurdle to the trade agreement. While the head of the Parliament’s trade committee, the German Social Democrat Bernd Lange, argued in favour of an agreement, a coalition of left-wing members of Parliament from the Greens, the Social Democrats, and the Left Group organised a “counter-summit” to protest a possible Mercosur agreement.

Climate activists from Greenpeace and other NGOs also protested the agreement, arguing that it would lead to more deforestation in the Amazon.

 source: Euractiv