France Rejects MERCOSUR Agreement without Anti-Deforestation Guarantee – Minister

RIO DE JANEIRO, BRAZIL – The French government will not endorse the association agreement between the European Union and MERCOSUR unless it includes guarantees that increased trade will not result in increased deforestation, French Trade Minister Franck Riester said on Friday, January 29th.

The statement came the same week that the President of the European Parliament Environment Committee, also French Pascal Canfin, rejected the agreement: “The Parliament has no intention of writing a blank check to Brazil on the Amazon.”

“It is inconceivable that the increase in trade will also increase the imports of deforestation. There must be guarantees in the law to fight importation of deforestation. This is the problem we have with MERCOSUR, and we are trying to find a solution that will ensure that the increase in trade with MERCOSUR will not increase the import of deforestation,” said Riester in a debate on how to make trade more sustainable at the World Economic Forum.

For negotiators on both sides, the repeated explicit French opposition is an indication that the EU-MERCOSUR agreement is unlikely to progress before the 2022 elections in France. Under pressure from the growth of the Green Party, President Emmanuel Macron’s government has prioritized environmental issues in internal policies and in communication.

The agreement between the two blocs has been on hold since 2019, when negotiations were completed, 20 years after they began. Since then, the agreements’ texts have been kept in the “legal review” phase, where details are clarified and adjusted. After that, the agreement will be translated into all EU and MERCOSUR languages and submitted to the European Parliament and the Council (which comprises the leaders of the 27 member countries) for scrutiny.

A final ratification will only occur after all national and regional parliaments have endorsed the agreement, but authorization by Parliament and the Council would allow the trade agreement to operate provisionally. However, the delay in the technical efforts reflects the political challenge that the agreement has been experiencing in Europe, mainly because of the increased deforestation under Jair Bolsonaro’s presidency.

Riester made it clear that France considers the trade agreements as instruments of pressure for partners to embrace sustainable development practices. “Trade agreements are good tools, which we want to use more and more, so that respect for the Paris Agreement will be essential and sustainable development standards respected,” he said.

The French government has advocated that the commitments signed by the European Union should include sanctions against partners who fail to comply with its sustainability clauses. Rieter mentioned as an example the recent debate with South Korea, which, according to the European Union, is not complying with worker protection clauses.

According to the Minister, France wants to keep the economy open, but preserving “coherence with our sustainable development agenda”. “From a political perspective, the kind of trade we support needs to reduce rather than increase imports from countries that do not abide by the same rules,” he said.

Riester also advocated that sustainability issues be included in WTO (World Trade Organization) multilateral trade rules. “We must have the ambition to create new standards that allow us to globally boost our sustainable goals, rather than encouraging the opposite,” the Minister said.

Rieter’s statements echo French President Macron’s recent criticism of deforestation in Brazil and reinforce opposition to the agreement in the European Parliament. Canfin quoted President Bolsonaro in an interview with the Portuguese newspaper Público.

“The agreement does not include any specific mechanism for returning to the previous situation, for instance in the cases of soy or meat, should President Jair Bolsonaro disrespect his commitments to fight deforestation.”

“The Brazilian government clearly does not intend to fulfill its commitments on the international scene, but in the MERCOSUR agreement we do not have any specific mechanism to stop the new financial and trade flows associated with the agreement, i.e. stop exports to Brazil and imports to the EU,” he said.

Just like the French Trade Minister, the European deputy Canfin believes that it is essential that the text include a “granular and detailed mechanism” to restore tariffs or eliminate quotas if trading partners fail to respect environmental commitments. He says it is necessary to step up the European Commission’s current strategy, which is considering presenting a “common interpretative instrument” in which both sides reassert commitments to more politically sensitive points.

However, according to Canfin, the measure will not be sufficient: “I’m sure that an interpretative and cosmetic statement is not enough.” According to him, restrictions to the agreement with MERCOSUR would be solved with a legally binding statement with the same status as the agreement. “What I can guarantee is that a simple statement with no legal force will not be enough for Parliament to ratify the agreement,” he told Público.

UNDERSTANDING THE ISSUE

What is the EU-MERCOSUR agreement?

A document containing a free trade section between the blocs and a political section, which includes areas such as human rights, scientific cooperation and immigration.

Where does it stand?

Negotiations began in 1999 and were completed in 2019. Currently, the text is under legal review, in which certain sections that may be in contradiction are adjusted.

What is left to be done?

After legal review, the text must be translated into the 23 official languages of the two blocs, and then it proceeds for ratification.

Who ratifies it?

In MERCOSUR, the agreement must be endorsed by the Parliaments of the four member countries (Brazil, Argentina, Paraguay and Uruguay). In the European Union, it must be endorsed at least by the European Council and the European Parliament, but the final processing depends on whether or not it is split into separate trade and political agreements.

What is the advantage of splitting the agreement?

The trade agreement is the responsibility of the EU only, and does not need to be endorsed by national and regional parliaments, where it is facing the greatest criticism. It also does not need to be unanimously voted on by the EU Council: 55% of the countries (currently at least 15), representing 65% of the bloc’s population are enough.

However, the splitting strategy, which was even considered by the European Commission to allow the deal to go ahead, has lost traction internally due to its potential to trigger contrary reactions among EU members.

When should the agreement be voted on?

There is no deadline, but negotiators on both sides say it could occur in the second half of 2021 or, more likely, after the French elections in 2022.