European Commission ignores the environmental and climate impacts of the EU-Mercosur trade deal

On 29 March 2021, the final version of the long-awaited assessment of the sustainability impacts of the EU-Mercosur agreement was published by the European Commission. The analysis was carried out by the London School of Economics.

Such sustainability impact assessments are conducted by the European Commission in order to identify key sustainability issues in advance and during trade negotiations, in order to inform the EU’s negotiating position. However, the assessment of the impacts that the EU-Mercosur deal could have on sustainability came nearly two years after the conclusion of the negotiations themselves, and hence its findings have not been taken into account in the negotiations, a significant failure which the European Ombudsman recently constituted as maladministration on the European Commission’s side.

Crucially, the content of the impact assessment itself leaves much room to desire.

Already the draft report from mid-2020 skimmed over the disastrous deforestation record of the current Brazilian administration, briefly mentioning the higher intensity of Amazon forest fires recorded in 2019, but claiming that it was not possible to determine whether this was an exceptional event or a trend. The final report, which comes after not only the 2019, but also the 2020 Amazon fire season – which confirmed this negative and worrying increase in deforestation in Brazil -, does not correct the analysis nor add any new deforestation numbers. This is a deliberate choice, given that in late 2020, ahead of publication of the sustainability impact assessment, official data had shown that deforestation soared to a 12-year high in the Brazilian Amazon. Yet these numbers are ignored in the sustainability assessment in order to favour the erroneous conclusion that the deal may not have a significant impact on deforestation. Such a conclusion had already been countered and debunked by various stakeholders, not least the experts who wrote a report commissioned by the French government which estimated that the deal could increase deforestation in Mercosur countries by a whopping 25%.

Even more striking is the impact assessment’s omission of an analysis of the potential CO2 emissions that the EU-Mercosur agreement will create linked to land use change needed to produce the increased agricultural exports from Mercosur to the EU. In fact, the impact assessment concludes that the CO2 emissions impact of the agreement overall will be „negligible“, yet in this final version a crucial disclaimer has been added that this analysis does not consider emissions related to land use, land use change and forestry. The report briefly refers to numbers regarding „current“ CO2 emissions from land use in Brazil and other countries, yet this comes from outdated 2010 data. In November 2020, before the final report was published, an analysis was released which estimated nearly 10% increase in annual carbon emissions in Brazil in 2019, mainly due to land use change and deforestation.

In the European Commission’s position paper reacting to the impact assessment, they omit this very important disclaimer, trying to pass off the assessment that the EU-Mercosur deal will lead to negligible impacts on CO2 emissions and climate change. It should have been highlighted by the Commission that the assessment did not in any meaningful way address the impacts on CO2 emissions coming from the land use associated with the deal.

Considering the EU’s ambitious climate goals, the EU Green Deal and the recently published Communication on Trade Policy Review which emphasises the need for sustainable trade which supports the green transition, it is a key failure that the sustainability impact assessment of the EU-Mercosur trade deal and the Commission’s official response to it does not grant much consideration to CO2 emissions and climate change.

The content and effect of the trade disciplines comprehensively covered in the agreement run absolutely contrary to climate objectives. Making the Paris Agreement an essential element via an additional declaration will not solve this significant gap. If the EU is serious about its environmental and climate commitments, it needs to reopen negotiations in order to revise the deal and address this shortcoming, anchoring sanctionable environmental and climate standards throughout the agreement.