The secrecy surrounding EU-Mercosur trade talks has come under fire from businesses and civil society on both sides of the Atlantic.
The European Commission has repeatedly promised to improve transparency in trade negotiations and recognised that the lack of access has fuelled public opposition to EU trade agreements. In its trade strategy paper of October 2015, the Commission says it will “request that the Council publish negotiating mandates and publish EU text proposals online for all negotiations.”
The EU’s negotiating positions published by the Commission include trade and sustainable development, access to raw materials and energy, agriculture, transparency, and an annex on barriers to trade in the automotive sector.
In addition, the EU has published its proposals for SMEs and state owned enterprises, the exploration and production of crude oil, natural gas and electricity, and a text on intellectual property rights.
In return, the EU is offering more market access for, for example, beef, poultry meat, sugar, and ethanol for biofuels.
Brazil is the world’s biggest beef exporter, exporting 1.85 million metric tonnes in 2016, which represents nearly 20 per cent of the world’s exports. Uruguay, Paraguay and Argentina, the other Mercosur countries, rank seventh, eighth and 11th respectively for meat exports.
There are more cows than people in Brazil, and millions of those cows are in the Amazon region. Soy farmers regularly move into already cleared cattle grazing land, pushing up land prices. The expansion of large-scale intensive farming is displacing the cattle industry into intact forest areas. Brazil’s Amazonian region lost 37,000 km² of tree cover in 2016 (about the size of Switzerland), nearly three times more than in 2015.
The Amazon rainforest helps preserve the Earth’s climate by storing huge amounts of carbon. Deforestation destroys forest ecosystems and their ability to act as a carbon sink.The environmental impacts of cattle ranching are not limited to the Amazon, or even Brazil. Covering a quarter of Brazil, the Cerrado is one of the world’s most important tropical savanna ecosystems. The Cerrado continues to lose ground to expanding beef and soy production, plus other farming commodities and infrastructure. Between 2013 and 2015, about 19,000 km² of forest were destroyed in the Cerrado. In Argentina, the expansion of genetically modified soy production for animal feed and intensive cattle raising are the main causes of forest loss in the country. Argentina is currently the 11th largest exporter of beef in the world. The country has an ambitious intensive livestock development plan for the north of Argentina, adding an additional 10 million cows, primarily for export to Europe and China. The proposed expansion threatens 10 million hectares of protected forests in the Grand Chaco region.
Although the leaked sustainable development chapter of the EU-Mercosur agreement contains some vague statements about the sustainable management of forests (see article 7, page 5), the provisions outlined are by no means sufficient to address the problems on the ground.
The trade in goods chapter contains an EU proposal for a prohibition of export taxes (Art. 12, EU proposal, leaked document number 5), which, if agreed, would eliminate Argentina’s export tax revenues on soy and in addition could encourage South American farmers to plant more soy. Document 8 of the leaked papers (EU offers on market access for specific agricultural products) shows that tariff offers by the EU are conditional on the “elimination of export taxes”.
In 2013, European governments and the European Parliament called on the Commission to develop an EU action plan on deforestation. Several governments reiterated this request under the Amsterdam declaration in 2015 and at the October 2017 agriculture Council. The European parliament again made the same plea in a resolution on palm oil and deforestation in April 2017. The Commission released a study in March 2018, but with no announcement on the action in plans to take to follow up the study.
The EU must take urgent steps, including legislative measures, to ensure that all supply chains linked to the EU are free from deforestation and comply with international obligations and standards on rights of indigenous peoples and local communities. The EU also needs to cut off the money supply that fuels forest destruction, and redirect existing financial flows towards global forest protection and restoration and the implementation of ecological farming practices.
The Commission has subscribed to the goal of ending deforestation by 2020 and the objective of limiting global warming to 1.5°C, under the Paris climate agreement.
Brazilian President Michel Temer recently reduced fines for environmental crimes and tried to relax the definition of slave labour. The agribusiness lobby caucus controls over 200 of the 513 seats in the lower Brazilian house, and plays a central role in maintaining Temer in power: President Temer recently avoided facing trial on corruption charges after surviving a key vote in parliament.
The EU suspended trade negotiations with the Philippines and Myanmar in 2017 due to concerns about human rights. Yet rather than waiting for the planned human rights impact assessment (part of the sustainable impact assessment, expected in 2018), the European Commission is rushing to conclude negotiations with Mercosur.
Despite Brazil’s worst recession in history, domestic emissions of greenhouse gases rose 8.9 per cent in 2016. This is mainly the result of increased deforestation as a consequence of farming, which is responsible for 74 per cent of Brazil’s emissions.
Brazil also has plans to enormously expand offshore drilling for oil. The Temer administration published an emergency bill in August 2017 that would create fiscal incentives for oil companies worth up to $90 billion (€76 billion). This would accelerate risky offshore oil extraction in Brazilian waters. If the bill succeeds, Brazil would be subsidising the exploitation of oil reserves whose development could consume at least 7 per cent of its carbon budget if global warming is to be kept below 2°C.
EU negotiators not only want access to the energy markets of Mercosur via this trade agreement, they also want to prohibit restrictions on the export of oil and gas. This means that if Mercosur countries were to restrict these exports in the future, they could be prevented from doing so by the existence of this trade agreement.
In November 2017, a Greenpeace investigation revealed how the UK trade minister lobbied Brazil on behalf of BP and Shell to address the concerns of oil corporations over Brazilian taxation, environmental regulation and rules on using local firms.
The precautionary principle is only mentioned once in all the leaked documents: in March 2017, EU negotiators added a reference to the precautionary principle in Article 11 of their proposal.
It is still unclear whether Mercosur countries will accept this reference, because the July 2017 version of the consolidated text puts the precautionary principle in brackets as a proposal by the EU (Article 10, version July 2017, not published by the EU, but available on www.trade-leaks.org. Doc 6). Even if all parties agree to the text, this reference is in the chapter on trade and sustainable development, which is excluded from the agreement’s state-to-state dispute settlement mechanism and is therefore virtually non enforceable.
Crucially, the precautionary principle is missing in the sanitary and phytosanitary chapter (document 2 on www.trade-leaks.org) and the technical barriers to trade chapter (document 3 on www.trade-leaks.org). This leaves EU regulations on health and the environment exposed to attacks from Mercosur countries.
The EU has already lost two WTO cases, both filed by the United States, involving the precautionary principle as a justification for its regulatory measures. The WTO’s dispute settlement body and its appellate body found that the EU’s import ban on beef treated with growth hormones violated provisions of the WTO agreement on sanitary and phytosanitary measures (SPS). The second lost case concerns the EU’s 1999-2003 de facto moratorium on the approval of genetically modified organisms (GMOs). Again, the WTO panel found that the EU had acted inconsistently with obligations under the SPS agreement. In both cases, the EU’s attempt to rely on the precautionary principle failed. In the GMO case, all four Mercosur countries joined the complaint.
The WTO has a very restrictive interpretation of the precautionary principle. Given the EU’s difficulties defending SPS measures based on the precautionary principle in the WTO, one would expect the EU to insert stronger language facilitating the adoption of precautionary measures in its bilateral trade agreements. Instead, the agreement’s draft SPS (doc 2 on www.trade-leaks.org) and TBT (doc 3) chapters have no reference to the precautionary principle. Even attempts to provide more leeway for regulatory bodies considering precautionary measures have been avoided. To a large extent, the EU-Mercosur SPS chapter boils down to a simple restatement of the highly restrictive SPS agreement under the WTO.
For more information on Greenpeace’s vision for better trade, see our ten principles for trade.