Will environmental failings bring down the EU-Mercosur deal?

It’s taken 20 years to build but Europe’s trade deal with the ‘Mercosur’ group of South American countries is looking increasingly like a rush job – with its environmental and social aspects the most shoddy, writes Amandine Van der Berghe.

Amandine Van der Berghe is a trade and environment lawyer with ClientEarth.

German Chancellor Angela Merkel has expressed “considerable doubts” over the EU’s free trade deal with the Mercosur bloc of South American countries, citing environmental concerns.

Earlier this summer, the Dutch Parliament requested that the Netherlands withdraw support from the agreement, citing the risk of deforestation it poses. And just last week, the French government confirmed its opposition to the current version due to deforestation worries.

After two decades of negotiations, the EU’s agreement with Argentina, Brazil, Paraguay and Uruguay now awaits endorsement from its member state governments and the European Parliament.

Together, with an annual GDP of €2.2 trillion, Mercosur countries represent the fifth biggest economy outside of the EU.

But EU policymakers and the public are worried that the deal will only hasten deforestation in South America, adding fuel to the fires already ravaging the Amazon in Brazil. Without proper protections built into law, the environmental implications of the deal are quite literally a burning issue.

Proponents of the deal point to the Trade and Sustainable Development (TSD) chapter of the agreement, which is intended to address its environmental and social impact. They say this chapter proves that trade policy can adequately address climate concerns.

To test this, we commissioned two academic legal experts, James Harrison and Sophia Paulini, to examine the deal’s sustainable development chapter. We wanted to see exactly how the environmental provisions would work in practice.

We’ve determined that as it stands, the TSD chapter lacks clear and effective policies regarding environmental protection and sustainability assurances – in three key ways.

Firstly, Paulini and Harrison found that the sustainability chapter does not significantly reinforce climate change commitments by individual countries, as set out in the Paris Agreement.

New international trade deals should be future-oriented and should help push countries towards net-zero greenhouse gas emissions. The chapter includes no incentive for this, nor sufficient protection against deforestation in the Amazon or elsewhere.

Secondly, not only does the agreement fail to address other environmental and social concerns, it also does not guarantee the ‘do-no-harm principle’, in terms of supply chains or sustainable trade.

This means it cannot guarantee that there will not be a further increase in environmental and social harms. So while it cannot mitigate existing climate issues, it could also make things worse for the planet.

The sustainability chapter also fails to ensure the effect of the deal is properly monitored so that governments involved can react accordingly in case of negative impacts. Plus, there are no sanctions available in case of disputes stemming from violations of the sustainability commitments, meaning it lacks credible enforcement.

These findings make clear that the sustainability chapter of the Mercosur agreement is not fit for purpose. What is more, at the time it was written, the deal’s own sustainability impact assessment had not even been conducted.

If the EU-Mercosur agreement is to actually stand up to scrutiny, it needs fundamental reform.

In June, we brought this issue to the European Ombudsman together with four other environmental and human rights organisations, arguing that the European Commission had ignored its legal obligation to ensure the deal would not lead to social or environmental degradation and human rights violations.

The Ombudsman has opened an inquiry into the agreement, so the Commission will be forced to reply.

Concerns about the deal are coming from environmental organisations as well as heads of state and parliaments. This is significant. It shows consensus on the need to comprehensively integrate environmental and social objectives at the core of trade agreements that the EU signs up to.

Building more legally binding obligations for sustainability into trade agreements would be an important first step. Another immediate improvement would be to strengthen the role of civil society in making sure trade deals can actually lead to better environmental, social and economic outcomes.

A formal complaint mechanism would allow individuals and organisations to report breaches of social, environmental and human rights obligations. And when there are violations, we must ensure proper action is taken.

The fact that the Mercosur agreement is being stress-tested is a good thing. And now that we have identified its environmental shortcomings, it is up to Latin-American and European civil society, as well as EU policymakers to work together to find solutions.

Otherwise, we risk signing onto a free trade agreement that could do far more harm than good.