EU-Mercosur Agreement: a shift in the EU’s mindset?

By Ilaria Sacco

In the last days of the Juncker Commission (June 2019), the EU and the Mercosur (the Common market of the South formed by Argentina, Brazil, Paraguay and Uruguay) reached an “agreement in principle” on the trade pillar (the so-called Free Trade Agreement, or FTA). The FTA would save over €4 billion worth of duties per year, making it the largest trade agreement the EU has ever concluded. After 20 years of negotiations, it is now in the translation and legal review phase. But when or whether this agreement will enter into force is very unclear.

The “after 2019”: a greener Union
2019 was a fundamental year in the EU as changes in the political balance have permitted the environmental issue to impose itself at the heart of the political agenda. After the 2019 Elections, Agata Gostyńska-Jakubowska, senior research fellow at the Centre for European Reform think tank, argued that “Greens could be kingmakers in the decision process”; Camino Mortera-Martinez, analyst at the Centre for European Reform, stated that “it’s now clear the Greens will have a very important role in policymaking”. This represents a turning point for the Greens, as they have also become more influential in crucial member states, such as Germany and France. This led to the creation of a greener Commission, which unveils the Green Deal. At this point, some objections were raised in Brussels regarding the incompatibility of the Mercosur agreement with EU environmental goals shaped by the Green Deal and its implications for indigenous people.
Something has changed also in the public opinion: at the end of 2019, for the first time, EU citizens put climate change at the top of the priority list. An independent YouGov poll commissioned by SumOfus revealed that an overwhelming majority of EU citizens believe that the FTA with Mercosur should be rejected. As David Norton, trade campaigns coordinator at SumOfus, noted “Europeans don’t want cheaper beef at the cost of deforestation”. A study by the Amazon Geo-Referenced Socio-Environmental Information Network (RAISG) shows that from the turn of the millennium, an area of 513,016 square kilometers has been destroyed. Deforestation of the Amazon is used mainly to create grazing land for cattle, used by big landowner who produce for the European market. It is estimated that 80% of the destruction of the Amazon is linked to the beef sector, in which the EU is the leading trading partner. By ratifying an agreement that weakens controls, the EU risks becoming more and more complicit in the destruction of the Amazon. And while environmental issues were reaching the heart of the EU internal political agenda, incoherence became more and more unbearable at the external level. Thus, the mindset started shifting.

What happened with the FTA?
An inquiry by the European Ombudsman, Emily O’Reilly, followed by a complaint of five civil society organizations, stated that the European Commission should have concluded an updated sustainability impact assessment before the EU-Mercosur agreement was agreed. This event is occurring at a time when several member states have expressed reservations regarding its ratification. Germany, one of the member states that initially fully supported the deal, has now changed its mind; an independent report, commissioned by the French government, concludes that “the FTA is a missed opportunity for the EU to use its negotiating power to obtain solid guarantees that meet the environmental, health, and more generally societal expectations of its citizens”. For that reason, France states that it “will not vote on the text as it stands”; Austria’s coalition government has recently vetoed the FTA, as it goes against the Green Deal. On the other hand, Portugal, having close ties with South America, puts the FTA as a priority of its presidency while adding that it will search for clarifications on environmental standards. To conclude, 2019 represents a breakthrough. Changes in the political balance and public opinion, both greener, and the need to be a coherence actor, both internally and externally, have forced the EU’s mindset to change regarding the FTA. The Mercosur agreement is needed, but “as it stands” it could not be accepted in this new political equilibrium. The introduction of an environmental clause in the text could be the solution, but the EU is not close to cracking it. In medio stat virtus, but the balance between trade and environment is still very fragile.

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