Emmanuel Macron calls EU-Mercosur ‘a very bad deal’: Know what this controversial agreement is

During the last day of his diplomatic trip to Brazil, French President Emmanuel Macron said that the potential free trade agreement between the European Union (EU) and the South American bloc Mercosur is a “very bad deal”.

Macron said that the deal has “nothing that takes into consideration the subject of biodiversity and climate; nothing.” He said, “let’s forge a new deal in light of our goals and reality, a trade deal that is responsible for development, climate and biodiversity.”

Here’s a look at what the EU-Mercosur agreement is proposing, why it is facing opposition, and its significance for the EU.

Provisions of the EU-Mercosur Association Agreement

The EU-Mercosur Association Agreement would ease and promote trade between the 27-member European group, and Mercosur– a South American economic and political bloc founded by Argentina, Brazil, Paraguay, and Uruguay.

Primarily, the EU-Mercosur deal would get rid of high tariffs that Mercosur levies on European import products like cars, machinery, information and communications technology equipment, textiles, spirits, and wine.

It also has provisions relating to the non-tariff barriers to trade in goods, government procurement, improving access to raw materials essential to the EU economy. That could mean an increased import of agricultural produce.

It will become easier for Mercosur to export to the EU, as well.

It’s a big deal for EU

The Association Agreement with Mercosur is a big deal for the EU, not just commercially, but also geopolitically.

The EU represents around 450 million people, while the Mercosur bloc has over 260 million people. According to one measure, the new free trade area would amount to around 20 percent of the world’s gross domestic product (GDP).

The Mercosur deal would also allow the EU to build a stronghold in South America. The region was traditionally not a high priority for the European bloc. Yet, in recent times, it has gained strategic importance. That is because the EU has been on the hunt for allies amid the Russia-Ukraine war and the rising tensions between the United States and China.

The controversy around the EU-Mercosur agreement

The EU-Mercosur Association Agreement has been in the works since 1999. It took two decades for the deal to be finalised. That was in 2019. However, the agreement is yet to be ratified by the European Parliament, the directly elected legislative body of the 27-member EU.

The deal has remained controversial, with several activists, experts, and groups ringing the alarm bells on the adverse consequences for the environment and human rights:

2. Critics say that the deal would increase deforestation and the destruction in South America, especially in the Amazon forests. The EU-Mercosur agreement would boost the demand for beef, soy and ethanol made from sugarcane for export to Europe. With a rise in the demand for land for producing these goods, a rise is expected in the forest fires to “clear” the ground in the Mercosur countries

3. If ratified, the EU-Mercosur agreement will boost exports of toxic pesticides to Mercosur, hampering biodiversity and food safety. Another concern when it comes to food safety is that the foods containing pesticides that are prohibited in Europe could make their way to the EU’s markets by way of imports from the Mercosur region.

4. Although the deal mentions labour rights, it does not include any binding human and labour rights standards on the Mercosur bloc. It also lacks binding rules on corporate accountability in case of violations.

5. Critics say that the deal would increase indigenous land-confiscation and unfair competition against sustainable farming.

6. Farmers in France, Ireland and a couple other regions have also expressed reservations about the EU-Mercosur deal. French farmers have objected to the prospect that it could allow imports of agricultural products, notably beef, that do not meet strict EU standards. In Ireland, the Irish Farmers’ Association claims the agreement will decimate the Irish beef market by allowing cheaper South American cuts into the EU.

The European Ombudsman has criticised the EU’s executive arm, the European Commission, for not finalising the sustainability assessment on the deal before concluding negotiations.

Whether the deal will make it through despite the staunch opposition from Macron, some Green and Left parties, and activists, remains to be seen.

With inputs from agencies