17.01.2020 |

EU-Mercosur trade deal will harm the climate and small producers

More goods will cross the Atlantic (Photo: CC0)

The trade agreement between the EU and the Mercosur countries is a bad deal for the climate and the environment. This is the message of a study written by two Argentinian researchers from the National Council for Scientific and Technical Research (CONICET). “The agreement will not only contribute to higher greenhouse gas emissions because of deforestation,” they warn. “The increased trade flows between the two blocs due to the reduction of tariffs to zero for a large number of products will also affect the climate.” In June 2019, after 20 years of negotiations, the EU and the Mercosur member countries (Argentina, Brazil, Paraguay and Uruguay) concluded talks on a free trade agreement between the two blocs. The study, commissioned by the Greens/EFA group in the European Parliament, analyses the agreements and mechanisms contained in the several hundred pages of text which make up the agreement, and looks at possible consequences if it were to enter into force. Dr Luciana Ghiotto and Dr Javier Echaide also looked at secondary literature, impact assessments and analyses of the different stakeholders. They arrive at the conclusion that the trade deal is fundamentally undermining global efforts to tackle climate change.

“The EU will import more meat and other agriculture products. With them, we will import emissions, deforestation, soil contamination, and human rights abuses, while endangering local farmers’ livelihoods,” writes Anna Cavazzini, a Member of the European Parliament who published the report. “In exchange, the Mercosur block will import more European cars, chemicals and machines, will risk the dislocation of its regional value chains and the disruption of its economy,” she says in the foreword. A chapter of the study covers the trade with agricultural commodities. “Regarding market access for agricultural goods, the agreement will generate winners and losers in both blocs,” the authors project. Mercosur agreed to liberalise 93% of its tariff lines for agri-food imports from the EU. The EU will liberalise 82% of agricultural imports. The remaining imports will be subject to partial liberalisation commitments, including tariff quotas for products such as beef, poultry, pork, sugar, ethanol, rice and honey.

The Mercosur countries already account for almost 80% of all beef imports to the EU today, with a total amount of close to 270,000 tonnes of beef in 2018. For poultry, the EU has granted them a quota of 180,000 tonnes of additional poultry meat under the agreement, which will benefit Brazil. A higher trade in poultry is likely to produce an increase of 6% in emissions, the study finds. For pork, the EU granted 25,000 tonnes at a low tariff of 83 Euros per tonne. The amount might seem small given that the EU is a net exporter of pig meat (more than 3.3 million tonnes a year), but it almost doubles pig meat imports from the Mercosur. “This strange logic of importing food products that are already produced in and even exported by the EU (due to overproduction), is fuelling climate change and putting extra pressure on EU farmers,” the authors warn.

In the case of ethanol, the agreement grants a quota of 650,000 tonnes per year for imports into the EU. Of this, 450,000 tonnes will be reserved for ethanol for chemical purposes, which will be duty-free, while the remainder will be subject to a reduced rate. These quotas are substantial when compared to current trade, as they represent almost half of Mercosur’s total exports of ethyl alcohol to the world. The authors therefore expect an increase in the production of sugarcane and corn for ethanol in Brazil, which will lead to increased deforestation. The increase in trade of ethanol might generate an extra 4% of CO2 emissions. The deal will especially promote increased trade with agricultural products which are linked to deforestation, e.g. because forests are cut down to make room for cattle grazing, or which depend on vast amounts of pesticides and fertilisers, such as monocultures of genetically modified crops. However, the agreement will not only contribute to higher greenhouse gas emissions through deforestation and land use changes in Mercosur countries but also through increased trade flows between the two blocs. “Certain food products that are traded internationally are also produced a few kilometres away from consumers in the Mercosur or EU countries, such as tomatoes, potatoes and fresh fruits, but will now travel 10,000 kilometres in vessels from, for example, Rome to Montevideo.”

In addition, the deal would also increase the economic reliance of Mercosur countries on the export of primary resources (raw materials and agricultural products). “The agreement will make these countries even more dependent on an agricultural model responsible for environmental destruction, deforestation and loss of food sovereignty. At the same time, it will also increase Mercosur’s dependence on imports of manufactured products from the EU,” the authors write. “Mercosur and the EU have undeniable economic asymmetries. Once it enters into force, this agreement will maintain and deepen the existing asymmetries. The sectors that will benefit in both blocs are the ones that are already the most competitive – in the EU, the industrial and capital-exporting sector, in Mercosur, agribusiness,” the authors warn. “Moreover, the agreement will have a substantial impact on small agricultural producers on both sides of the Atlantic. While economic power will be concentrated in the hands of a few large-scale exporters of agricultural products, small farms will face the detrimental consequences of further agricultural liberalisation. In the EU, sugar and ethanol producers as well as the poultry and the pork sectors will likely be affected, as they will have to deal with even more intense competition with Brazil,” a major producer and export nation of these products. (ab)

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