What is the best direction for a fairer agreement between Mercosur-EU?

IPAM, Sara Pereira in 07/04/2021

The second episode of the OCAA Webinaries series, promoted by the Amazon Observatory on Trade and Environment, was broadcast on Thursday, April 1st. Moderated by the director of the Center for Integration and Development Studies (Cindes) and member of OCAA, Sandra Rios, the event invited experts to discuss the best ways forward to reach a more sustainable agreement between Mercosur and the European Union (EU).

The starting point for the conversation was the article “Proposals on the EU-Mercosur Association Agreement and the Environment”, whose elaboration was coordinated by the professor – and guest of this second round – of the University of Warwick University (UK), James Harrison, along with other authors.

The text states that the chapter “Trade and Sustainable Development” (TSD) of the EU-Mercosur Association Agreement (EUMAA) does not adequately address the issues of climate change and environmental degradation, both in the EU and in the countries Mercosur. The publication offers, among other points, five proposals to address serious and globally urgent environmental issues.

Is penalty the solution?

In presenting the study published by the University of Warwick, Harrison stated that the absence of any kind of sanctions – among other limitations, such as the lack of a role for civil society bodies – means that the TSD chapter, suggested by the treaty, may not be a credible enforcement mechanism.

“This part of the agreement contains a series of provisions on broader environmental issues, but many of them are vague commitments for cooperation, with no specification or details on the formal contribution, as well as its objectives, priorities and intensity,” explained the professor.

Then, the professor at the School of Economics of São Paulo at the Getúlio Vargas Foundation (FGV), Vera Thorstensen, pointed out that it would be problematic to use the trade instruments proposed by Harrison, as these are not compatible with the rules of the International Trade Organization (ITO). According to her, different from what the study proposes, it is impossible to propose variable tariffs for compliance or not with environmental rules, in addition to going against the rules established by the ITO.

“Use the EUMAA to pressure Brazil to fulfill its obligations (…), the agreement is for trade, it is not a multilateral investment agreement,” said Vera. “The objective is excellent, but they are using the wrong instruments to achieve them and that can even cause the opposite effect”, she added.

Subsequently, senior professor of Global Agribusiness at Insper and coordinator of “Insper Agro Global”, Marcos Jank suggested that Europe evaluate the best way to deal with Brazil, instead of applying sanctions and banning national products as a solution to mitigate the problems climate change.
“10 years ago, 25% of Brazilian exports went to Europe. Today, the number has dropped to 16% ”, he pointed out. “Asians are buying Brazilian products, in increasing volumes, and they are far from reaching this level of exclusion and banishment. They want monitoring, but not to remove Brazil from the scenario, as they will have food security problems ”, exemplified Jank.

Past and future

In response to comments by Thorstensen and Jank, Professor Harrison stressed the need to look at not just the 25 years it took to negotiate the deal. For him, it is important to take into account the changes that the rules established in the past can undergo and mean in the next 50, 100 years. “They [the rules] will be the foundations of two economic blocs with 600 million people who will govern this commercial relationship for decades and decades,” he explained.

In the end, the guests had a chance to answer questions and observations from the audience. Ana Toni, executive director of iCS (Climate and Society Institute) and a member of OCAA, questioned Harrison whether it would be acceptable for the agreement to be signed even before Brazil complied with its own law, since the average deforestation of the Amazon in 2020, according to her, it would have been around 11 thousand km².

The professor explained that trade agreements often require countries to enforce their own laws and stressed that Brazil’s conservation efforts seem to have regressed in 2020. “Usually, countries reinforce each other’s international commitments, but in this situation we have a problem. So I think that going to the national commitments that Brazil has made in its laws is one of the solutions”.

To follow more about this discussion, click here and watch the second full episode of OCAA Webinars (soon with English subtitles).

Click here and access the first episode of OCAA Webinars: “The EU-Mercosur Agreement & Deforestation in the Amazon”, mediated by the communication coordinator of the Climate Observatory, Claudio Ângelo. The senior researcher from Imazon (Institute of Man and Environment of the Amazon), Paulo Barreto, and the senior specialist in environmental analysis at the London School of Economics, Stefania Lovo, participated as guests.

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