AUTHORS: Pierre Leturcq and Eline Blot (IEEP); Dr Markus Gehring, Pr Marie-Claire Cordonier-Segger, Marios Tokas and Matheus Frederico Paes Garcia (CISDL); Emilie Kerstens (E3G); Virginia Enssle (FTAO); Mathilde Dupré and Stéphanie Kpenou (Veblen Institute)

In 2019, the European Union and the Mercosur countries (Brazil, Argentina, Uruguay and Paraguay) reached a political agreement towards a free trade agreement between the two regions, after two decades of negotiations. Gathering experts from the Centre for International Sustainable Development and the Law (CISDL), E3G, the Fair-Trade Advocacy Office to the EU, the Institute for European Environmental Policy (IEEP) and the Veblen Institute, this study Commissioned by the Greens/EFA group in the European Parliament, delves into a series of credible alternatives to the 2019 agreement. 

On 28 June 2019, the European Union and the Mercosur countries (Brazil, Argentina, Uruguay and Paraguay (1)) reached a political agreement towards a free trade agreement between the two regions, after two decades of negotiations. In the ensuing period, the path to ratification has been fraught with internal and external challenges. The sustainability impact assessment that should have informed the negotiations was completed long after the announcement that negotiations had concluded (2) – a situation that, according to the EU Ombudsman, constitutes a case of maladministration (3).  

The agreement was highly scrutinised and criticised inside and outside Europe, in particular for its potential environmental impact, once again putting the issue of EU trade policy sustainability in the spotlight.  

The EU-Mercosur trade agreement promotes trade flows of goods that are incompatible with the objectives of reducing global emissions, reducing deforestation and protecting biodiversity. It relegates Mercosur countries to the role of agro-exporters and suppliers of mining and energy resources, trapping them in an extractivist model that is destructive for the environment and local populations. The agreement encourages EU exports in all sectors, regardless of their environmental and social impact (e.g. reduced customs duties on automobiles, irrespective of engine type, vehicle size or energy efficiency, and on plastic products and pesticides banned on the EU market for health or environmental reasons). The agreement would also encourage the entry of agricultural products into the European market subject to production standards that are far less stringent than European standards. This is the case for food products. Nearly 30% of active substances of pesticides authorised in Brazil are not approved in the EU due to their harmful effects on health and the environment (4). These regulatory differences in production standards also apply to meat. While Mercosur countries already account for over 50% of European beef imports, the agreement could increase EU beef imports from Mercosur by a further 23% to 52% by 2030 if the free trade agreement is fully implemented. Brazilian livestock farmers use antibiotics such as monensin as growth promoters – a practice strictly prohibited by the EU in the fight against antibiotic resistance. The meat industry is also one of the most concerned by forms of modern slavery listed in the Global Slavery Index, which affects in total more than 360,000 people in Brazil. Implementing this agreement could also exacerbate the destruction of ecosystems and undermine European efforts to combat imported deforestation (5). And the European regulation on imported deforestation would only provide a limited solution, notably because it does not cover all sensitive products and all forested land exposed to deforestation such as the Cerrado. Human rights of indigenous communities are directly threatened by the agreement, since areas at risk of deforestation often border indigenous territories (6).  

In the EU, these challenges have materialised through outright opposition from certain Member States’ governments or national assemblies to the existing deal. In a resolution of 7 October 2020, the European Parliament emphasised that “the EU-Mercosur agreement cannot be ratified as it stands” (7). In its annual report on the Common Foreign and Security Policy adopted on 28 February 2024, the European Parliament however included a call to “the Commission and the Spanish and Belgian Council Presidencies to advance decisively and conclude the agreement with Mercosur before the end of the current parliamentary term, while keeping the highest level of ambition in relation to the enforcement of its sustainability provisions” (8). Attempts to amend this text failed. The agreement is also subject to strong opposition from civil society organisations: they stress its obsolete nature and the threat it poses to biodiversity, climate action and human rights (9). Additionally, Mercosur officials have asked for the terms of the agreement to be better balanced (on the opening up of public procurement markets or trade in goods, for example). They have also requested additional measures from the EU’s side to mitigate the economic repercussions of its autonomous environmental regulations, such as the deforestation-free products regulation, as well as climate finance and capacity building to support them in making these commitments. The recent election of a new climate-sceptic, far-right president in Argentina has brought new uncertainties. And unfortunately, the legislative proposals formulated during the first month of his mandate confirm the high risk of environmental regression (10). This change of government will test the European doctrine that had been forged with regard to other countries led by climate-sceptic presidents such as D. Trump or J. Bolsonaro – whose terms of office have been marked by stagnation and even regression in terms of environmental policy, namely not to grant new trade preferences to partners who renege on their climate commitments.  

The emergence of these obstacles prompts a critical examination of the viability and plausibility of ratifying the current agreement in its present state – from an environmental, social and democratic perspective, but also in terms of the level playing field to be upheld in relation to production standards, in the context of farmers’ protests across Europe.  

Gathering experts from the Centre for International Sustainable Development and the Law (CISDL), E3G, the Fair-Trade Advocacy Office to the EU, the Institute for European Environmental Policy (IEEP) and the Veblen Institute, this study delves into a series of credible alternatives to the 2019 agreement.  

This work leads the authors to articulate a set of guidelines and policy recommendations for the next Commission towards a fair and sustainable partnership between the EU and the Mercosur countries as a regional bloc or on a more bilateral or even plurilateral basis. Commissioned by the Greens/EFA group in the European Parliament and coordinated under the Green Trade Network, led by IEEP, this study stands as a key contribution to the ongoing debate surrounding the future of EU-Mercosur relations. The first section provides an in-depth legal analysis of the current text of the EU-Mercosur agreement and the so-called “side letters” issued by each of the two Parties to address a number of issues that stand in the way of a ratification, in particular those related to environmental protection and the deal’s environmental impacts. Section two explores four alternatives, combined with actionable recommendations, to overcome the status quo and progress towards intensified cooperation between the two blocs on sustainability matters. 

Policy Recommendations

To build future relations between the EU and Mercosur in the pursuit of sustainability for people and ecosystems, and regardless of the form and modalities of the partnership, authors have drawn up the following principles and action points, as a compass for decision-makers and negotiators on both sides of the Atlantic.

1. Any agreement or political partnership with Mercosur countries (as a bloc or individually) should be compatible with the Paris agreement and the Kunming Montreal framework in compliance with international human rights law, ILO Standards, WTO law and Public International Law.
2. Future cooperation vehicles between the two blocs should be based on dynamic assessments of the impacts of any market access measures on both ecosystems and local communities. They should include tailored roadmaps for addressing key environmental and social issues, combined with review and adjustment clauses.
3. Any EU-Mercosur partnership should be supported by a financial package that facilitates compliance with EU market access requirements and contributes meaningfully and sustainably to the Mercosur region’s clean and circular economy transition, further linking the EU’s trade policy with specific programmes such as the Global Gateway.
4. The future partnership should provide a series of assistance measures to ensure sustainable management of resources and a fair allocation of value as well as to raise the capacity of local actors to comply with the EU’s environmental and labour regulations.
5. Parties should refrain from seeking to increase trade between the two blocs as a goal in itself, but primarily seek to improve commercial partnerships of products that are produced sustainably and are not easily available in the other
   bloc.
6. Market-opening provisions of such a partnership should focus on trade in sustainable products produced by companies abiding by the CSDDD and similar laws, favouring local and domestic products when possible. This shall also mean stopping the export of harmful substances that are banned in the EU (pesticides).
7. Any initiative for dialogue on standards should be aimed at increasing the level of protection for workers, consumers and the environment and not at facilitating trade (which may be an indirect benefit but should never be a condition for it).

This study was commissioned by the Greens/EFA group in the European Parliament and coordinated under the Green Trade Network, led by IEEP. It was first published on the Greens/EFA group in the European Parliament website.

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1 The agreement was finalised in 2019, well ahead of Bolivia’s accession to Mercosur in 2023. However, Bolivia would naturally become a party to the agreement if it were concluded (see the legal analysis).  

2 The agreement was completed without a comprehensive social and environmental impact assessment. The first SIA published in 2009 highlighted several harmful environmental and social consequences of trade liberalisation. It recommended implementing preventive measures to mitigate these effects, several of which were simply rejected by the European Commission. A second SIA was conducted after the resumption of negotiations. However, the first version of the draft EID interim report was not published until four months after the announcement that negotiations had been concluded, and this time, the negative impacts tended to be minimised. The final evaluation report containing a series of recommendations was only published in July 2020, without taking into account the agreement’s final terms known a year earlier.  

3 Decision in case 1026/2020/MAS concerning the failure by the European Commission to finalise an updated “sustainability impact assessment” before concluding the EU-Mercosur trade negotiations  

4 Report of the Special Rapporteur on the implications for human rights of the environmentally sound management and disposal of hazardous substances and wastes, Visit to Brazil, A/HRC/45/12/Add.2, 5 August 2021, p. 7. 

5 Fern, Why the EU Deforestation Regulation won’t sugar coat the EU-Mercosur Trade Agreement, 20 April 2023  

6 Fern, Measuring the impacts of the EU Mercosur Trade deal on land use, forests, and the people who depend on them, 2 December 2020.  

7 European Parliament resolution of 7 October 2020 on the implementation of the common commercial policy – annual report 2018  

8 European Parliament annual report of 28 February 2024 on the implementation of the Common Foreign and Security Policy  

9 https://stopeumercosur.org/  

10 The “Ley de Bases y Puntos de Partida para la Libertad de los Argentinos” bill, known as Ley Omnibus, which the Executive Branch sent in December 2023 to Congress dedicates chapter three to weakening key environmental laws (the Glaciers Law, the Native Forests Law and the Environmental Protection Law for the Control of Burning Activities). Glaciares, bosques y quema de tierras: qué plantea la Ley Ómnibus para el cuidado del ambiente – Infobae