By Thatiane Pappis, MSc Sustainable Development.
With the initial aim of enhancing political and economic integration of European countries, the European Union (EU) treaty also focuses on building relationships with international markets through cooperation agreements. This is the case of the EU-Mercosur Free Trade Agreement (FTA). The Mercosur (Mercado Comun del Sur), or The Southern Common Market - in English, is a regional integration process between Argentina, Brazil, Paraguai and Uruguai, with the objective of promoting a common space for business and investment opportunities by integrating national economies into the international market. The result of this organization is the establishment of several agreements with countries or groups of countries, such as the EU.
The EU-Mercosur FTA has been in negotiations for over 20 years and was finally established in June 2019, while still waiting for the last phases of signature and conclusion. The ratification of this agreement would result in the creation of the largest free trade area ever founded by the EU, with a population cover of over 780 million people, affecting diverse sectors related to environment, economy and regional communities both in the EU and in the Mercosur. Some – or most – of the effects within environmental and social concerns are thought to be negative, due to many reasons. In fact, this is the main argument of several environmental institutions and Non-Governmental Organizations from Europe and South America to be against the ratification of this FTA.
For the EU, the main benefits from the ratification of this FTA are generating economic growth and creating jobs in Europe. This would be possible by the higher access of raw materials to EU industries and agricultural commodities at a lower cost. The elimination of commercial barriers would also contribute to EU aims, as it would allow for more competitiveness of EU companies, with higher exports. In theory, this FTA should also promote human rights, democracy and sustainable development. In practice, these non-commercial objectives are highly contested. If this agreement is ratified, it will make it easier for European companies to sell cars, pharmaceutical products and financial services to countries from the Mercosur. Agricultural products from Mercosur countries, such as meat, sugar and ethanol, will be more competitive in the European market.
Between 2005 and 2017, over 80% of tropical deforestation
embedded in EU imports was concentrated in soy. © Adriano Gambarini / WWF-Brazil.
Hence, by creating a free trade policy, the countries involved might be putting at risk their local businesses, as well as jeopardizing local livelihoods that depend on food production. Additionally, the impact of this FTA would also increase pressure on environmental conservation, as an increase in international trade is directly proportional to an increase in production and financial investment in deforestation for agricultural purposes. Within the agricultural sector, soy and beef are some of the main products imported by the EU. Those are well known to be closely related to the increase in deforestation in South American countries, such as Brazil. Therefore, the facilitated importation of soy and beef from Brazil into the EU would further increase the demand for those products, which would increase the pressure to produce more, ultimately resulting in higher deforestation and pressures on indigenous groups for land use.
Considering the impacts generated by this agreement on the European perspective, we can highlight the threat to European businesses, in which the FTA’s lower tariffs and higher quotas for beef and chicken exports from Mercosur would ultimately lower the price of local products in Europe. With the elimination of 93% of tariffs on Mercosur exports, the supply of certain products to Europe will increase and, consequently, lead to a fall in their prices. Another problem relates to consumer health and food ethics. As countries from Mercosur have weaker environmental standards and regulating laws, the use of toxic pesticides and harmful substances within food production are less controlled. The current agreement would greatly facilitate access to such products into the EU, jeopardizing its long path towards a more sustainable and healthy diet for its consumers.
Those are serious consequences that should be considered when finalizing the agreement, in which all stakeholders that can possibly be affected should be included and participate in the decision-making process of the ratification. The decision process, as it currently is, does not respect public opinion, neither presents the negative consequences if put into force. It is an agreement based on neoliberal premises, where social and environmental solutions are based on economic growth. This is exemplified by the rather short and weak trade and sustainable development section of the FTA, with a limited scope and weak enforcement mechanisms.
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