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  • Diego Pulido

EU-Mercosur Trade Agreement: A Never-ending Story?

Just imagine that you want to collaborate with another group. So you decide to approach the other group, in order to negotiate for an agreement that benefits the two parties. It should not be too hard, should it?

In the economics world, finalizing a Free Trade Agreement (FTA) might take longer than one might think. A Free Trade Agreement aims to eliminate trade barriers between the two parties. Therefore, all parties involved have to agree to many clauses that explain how, when and what trade barriers will be eliminated. The European Union (EU) and Mercosur (Latin American customs union) took this very seriously, leading to a record-breaking 19 years of negotiations for the EU-Mercosur FTA. The negotiations started in the year 2000, and the two groups ultimately agreed on a deal on the 28th of June 2019. They agreed to lowering trade barriers for agricultural products to foster exports from Mercosur to the EU , while they also agreed on lowering barriers of trade for vehicles, textiles and chemicals (among others) to increase exports from the EU to Mercosur. However, the story does not end there. Currently, the agreement still needs to be ratified by all member nations of the two groups involved. The European Union is formed by 27 member states, and Mercosur by 4 member countries (Argentina, Brazil, Paraguay and Uruguay). Yet, countries in both parties have expressed their concerns about the terms that had been initially agreed on. This is because some countries in the EU and Mercosur have concerns regarding the environmental impact of the FTA. On the other hand, some member countries argue that the FTA could lead to high economic growth in both regions. Meanwhile, Josep Borrell (EU’s head of foreign affairs) has called for action to sign the agreement. Should the EU-Mercosur agreement be ratified despite the existing concerns? The answer is a resounding no. The climate concerns that arise from the FTA outweigh any potential economic benefits.

“Cows for cars” is the common slogan that critics of the FTA use in order to present the flawed nature of the agreement. Both goods are noteworthy for their high emissions. Nevertheless, it is worth bringing special attention to Mercosur exports. As previously mentioned, Mercosur is seeking to export more agricultural products to the EU. However, “Mercosur is already by far the largest supplier of beef to the EU, accounting for more than 80% EU beef imports in 2020.” Hence, the FTA would create an incentive for farmers to provide more beef to the EU due to the lowered trade barriers between the two customs unions. Moreover, “cattle meat is the dominant contributor to deforestation, mainly because of Brazil, where two-thirds of cleared land in the Amazon have been converted to cattle pastures.” Therefore, an increase in beef production due to lower trade barriers would lead to higher deforestation rates, especially in Brazil, putting the Amazon rainforest at risk. This is an important concern, since in 2020, 3,253 square miles of Amazon rainforest was destroyed due to deforestation and land clearing practices. Lastly, one must consider that the transportation of animal agricultural products from Mercosur to the European Union has an extremely high carbon footprint. The products would have to cross the entirety of the Atlantic ocean in order to reach their destination. Transporting beef from Brazil to Europe amounts to a total of 8.8 tons of CO2 per container. This is a really high environmental cost that could be avoided, if the EU chose to focus on different products, or simply find a different trading partner in a closer geographical location. In summary, the FTA would incentivize animal agriculture in Mercosur nations. Most notably, Brazil would risk an increase in deforestation of the Amazon rainforest. Lastly, the carbon footprint of transporting animal agricultural products would be highly detrimental.

Even though the agreement is between the EU and Mercosur, protecting our climate and the environment is a collective action issue that requires the cooperation of the whole globe. Hence, if we see that an initiative might lead to climate change, we require international cooperation to tackle this issue. The future of the Amazon rainforest is at stake. The Amazon rainforest plays an important role in regulating the world’s oxygen and carbon cycles. It produces 6% of the world’s oxygen and it is one of the largest carbon sinks in the world. Therefore, it is able to absorb carbon dioxide and produce oxygen in order to regulate oxygen and carbon cycles. By encouraging deforestation in the Amazon rainforest, we are losing one of our best tools to fight climate change.

In conclusion, if the agreement does not change and takes a different route, neither the EU nor Mercosur should sign the free trade agreement. This is because Mercosur and the EU have not reached the most optimal agreement, as the environment must be a priority. The environmental costs of animal agriculture are too high, due to high transportation costs as well as the risk of deforestation in the member states. Most notably, Brazil would risk higher deforestation in the Amazon rainforest, an important carbon sink and oxygen producer for the world. Lastly, even though it is an agreement between two customs unions far from the United States, the impact is very real for the whole globe.


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