Mercosur states demand concessions for free trade deal

Brussels, Berlin The Latin American Mercosur states are setting new conditions for the planned free trade deal with the EU. This emerges from a negotiation offer from the Latin Americans, which Handelsblatt was able to see.

The Mercosur countries Brazil, Argentina, Uruguay and Paraguay emphasize their interest in quickly concluding the negotiations on the Additional Protocol for Sustainable Development, which the EU is pushing for. However, they make it clear that they would not accept “any sanctions or even suggestions of the application of sanctions.”

The additional protocol would therefore fall far short of the demands of environmentalists and human rights organizations who are critical of the agreement. One concern is that better sales opportunities for Brazilian beef exporters could accelerate deforestation in the Amazon rainforest.

The demand is also bad news for the German traffic light coalition. Chancellor Olaf Scholz (SPD) wants to conclude the agreement as quickly as possible, as does Federal Minister of Economics Robert Habeck (Greens). Finance Minister Christian Lindner (FDP) also said on Friday that he would expressly welcome progress in the Mercosur negotiations. But the traffic light agreed a few months ago to only support the Mercosur agreement with an additional protocol that was approved for sanctions.

In practice, this could mean that the EU could restrict access to its market if it became apparent that the Brazilian authorities were not doing enough to combat deforestation. Brazil and the other Mercosur states call such punitive measures an infringement on their sovereignty.

EU Commission Vice President Valdis Dombrovskis said at the EU-Latin America finance ministers’ meeting in Santiago de Compostela that the Commission would need a few days to analyze the South Americans’ paper. The chief negotiators from both sides had a “constructive meeting” on Thursday. It is hoped that an agreement will be reached by the end of the year.

Spanish Economy Minister Nadia Calviño added that her government would do everything it could to finalize the Mercosur deal under Spain’s EU Council Presidency by the end of the year. Spain supports the free trade agreement because it is very beneficial for both sides.

Burning rainforest puts a strain on conversations

The EU and the Mercosur countries had actually agreed on a treaty text in 2019, but the agreement was never ratified. The main reason was that Brazil, under the presidency of right-wing populist Jair Bolsonaro, showed little interest in protecting the rainforest. With the return of Luiz Inácio Lula da Silva to the presidency, new opportunities are now opening up.

In March, the EU Commission submitted a series of proposals for an additional sustainability chapter. The Mercosur countries did not want to accept this. Argentina’s President Alberto Fernández complained that the Europeans were burdening the talks with additional demands. Lula had also rejected the European proposals as “unacceptable”, also in order to strengthen his own negotiating position.

Cleared rainforest in Brazil

An additional protocol in the Mercosur agreement is intended to prevent further deforestation of the Amazon rainforest.

(Photo: Reuters)

Now the Mercosur states have presented their counteroffer. It is kept short, the text only covers one page. One point is the call for financial support. The Mercosur countries want to receive money from the EU to help their companies comply with complex European regulations.

Does the EU have to weaken its deforestation regulations?

The most important requirement can be found at the end of the document. In it, the Mercosur states demand “trade concessions to be rebalanced” if they are “suspended or repealed” by EU laws. This passage appears to be aimed primarily at the European deforestation regulation. The regulation, which came into force in June, is intended to ensure that no products for which forests have been cut down enter the EU internal market.

The Brazilian government is said to have repeatedly expressed its dissatisfaction with this regulation in discussions with the Europeans. Now it is apparently trying to use the Mercosur talks to obtain concessions. Green politician Anna Cavazzini doesn’t want to accept this: “A weakening of the law in addition to an increase in agricultural exports through the Mercosur agreement is a danger for the Amazon and indigenous communities,” said the chairwoman of the Internal Market Committee in the EU Parliament.

The CDU politician David McAllister, who heads the Foreign Affairs Committee of the European Parliament, emphasized the political importance of the free trade pact. Europe now has the chance to finally ratify the negotiated agreement. “If we don’t succeed,” the EU will put its “credibility as a reliable trading partner at risk.”

>> Read here: The supposed “savior of the rainforest” – Lula wants to invest billions in anti-climate projects

The Latin American offer has only been available recently. On Thursday, negotiators from both sides met online. EU Commission chief Ursula von der Leyen hopes that an agreement can be reached by the end of the year.

Carl-Julius Cronenberg, who is responsible for free trade in the FDP parliamentary group, welcomed the fact that the negotiations are now moving again. The rejection of a sanctions mechanism by the Mercosur states is “an expected attitude”. Regarding the upcoming further negotiations, Cronenberg said: “The current geopolitical situation calls for a pragmatic trade policy.”

More: The EU’s Mercosur agreement is in danger of failing

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