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The European Union and the Mercosur bloc, which includes Argentina, Brazil, Paraguay and Uruguay, have reached an agreement that will create the world’s largest free trade area. It affects almost 800 million people, corresponding to nearly 25% of the world’s GDP. But what are the implications for the environment of the deal, and how will it affect Brazil, particularly?

The details: cars for cows

After 20 years of negotiations, the EU and the Mercosur bloc struck a deal on June 28. The agreement stipulates that over the next 10 years, both parties will progressively eliminate tariffs on a large number of products. Although we’ll still have to wait for the details, we already know the big picture of what the deal will mean for both parties.

For the South American countries, this will mean that they will be able to expand their agricultural markets. This is particularly important for Brazil who will be able to expand its agricultural market towards the EU. Beef, poultry, sugar and ethanol are some of the goods that will have their tariffs waived.

For the EU, customs duties on items such as cars, car parts, chemicals, machinery and textiles will be removed. This will help European companies compete with national industries in Brazil, which traditionally has been a very protectionist country.

For Brazil, the deal means that 90% of its exports will enter the EU free of duties, a huge increase from today’s 24%. According to the Brazilian Ministry of Economy, the agreement will increase the country’s GDP in US$ 87,5 billion in 15 years.

What about the environment?

As of now, only a general overview of the agreement has been released. But according to the EU, the final text will include a chapter on sustainable development. The chapter will state that both parties should fight against climate change and deforestation.

The sustainable development fact sheet issued by the EU states that beef production is already so high in Mercosur countries, that the deal will not lead to an increase in production. “Brazil alone already produces 11 million tonnes of beef every year and the agreed quota [99,000 tonnes of beef with a 7.5% duty] will still be split among the four countries.”

But there are no real guarantees. Cattle ranching is one of the main drivers of deforestation in the Amazon. And Jair Bolsonaro’s administration is strongly backed by the Brazilian agribusiness sector. Since he took office early this year, his government has made several moves to weaken environmental regulations.

Some of these plans include opening indigenous lands to farming and cattle ranching and reducing protected areas within rural properties. Environmentalists are concerned that opening new fronts for agribusiness could increase the pressure on the remaining forests.

Another worrying point is pesticides. 

Brazil is one of the world’s top pesticide users. The EU says the deal will not affect Europe’s standards on food safety. However, European countries have a tradition of enforcing strict regulations for local producers, but turning a blind eye towards Brazilian imports.

According to a comprehensive study published in 2017, European countries acquire dozens of agricultural goods that are grown using pesticides that are banned in the EU.

Protecting Brazil’s forest is critical for the planet. According to the IPBES report for the Americas, Brazil is the country that contributes the most to ecosystem services in the world. These services include clean air, drinking water and pollinators, among others.

At the same time, the report warns that “between 2003 and 2013, the north-east agricultural frontier in Brazil more than doubled from 1.2 to 2.5 million hectares, with 74 per cent of new croplands taken from intact Cerrado in that specific region”.

Reactions

The European automobile industry has been one of the first industries to welcome the deal. This is the same industry that last year admitted they might not reach the EU’s 2021 target to create vehicles that are less pollutant.

On the opposite end, French and Irish farmers are worried that the deal will pit them against cheaper products from places like Brazil, where regulations are more flexible. The Irish Farmers’ Association even described it as “a disgraceful and feeble sell-out”.

European NGOs have also opposed the negotiations on the grounds that the EU should not cooperate with Brazil’s current government.

In an open letter signed by more than 300 organizations last June, they claim that the EU should not “negotiate a trade deal with Brazil until there is an end to human rights violations, enforce strict measures to end further deforestation and concrete commitments to implement the Paris Agreement.” 

Several NGOs have also recently expressed their opposition to the deal.
Perrine Fournier, from Fern, a British NGO devoted to forest conservation, said the agreement will have negative impacts for the environment.

“This trade deal is a double whammy for the planet: it will exacerbate deforestation and encourage the production of big, dirty, cars. This might just be the EU’s worst trade agreement for the climate”.

In the same line, Grenpeace described the agreement as “a disaster for the environment on both sides of the Atlantic”. 

Another critical voice has been Nicolas Hulot, France’s former environment minister. Hulot resigned last year from Macron’s cabinet due to the government’s inaction towards tackling climate change.

“On the one hand, this creates doubt about political intentions and declarations, given the reality of practices, and we see the consequences when doubts about political action grow,” Hulot  said.

“On the other, we let a president, Jair Bolsonaro, destroy the Amazon rainforest, without which we have no chance of winning the climate battle.”

Not a closed deal yet

The agreement needs to be ratified by national parliaments of all countries involved, the European Parliament and the EU Council.
The president of France, Emmanuel Macron, said he will not sign the deal if Brazil withdraws from the Paris accord.

“For a simple reason. We’re asking our farmers to stop using pesticides, we’re asking our companies to produce less carbon, that has a competitiveness cost,” Macron said.

In Brazil, since Bolsonaro took office the government has authorized the use of 239 new pesticides. Many of them are banned in the EU.

Green euro-deputies have also announced that they will fight against the deal. Member of European Parliament Molly Scott recently tweeted:

“This is political posturing and the fight to block Mercosur starts now. The European Parliament will not collude in the destruction of the Amazon and the murder of its indigenous guardians”.

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