French President Emmanuel Macron dropped a bombshell on Friday: His office said France is opposed to the ratification of the European Union’s latest big trade deal, with the Mercosur group of South American countries, because one of the group’s members, Brazil, has shown a lack of commitment to preserving the Amazon rain forest.
The deal, reached in June by the European Commission after 20 years of negotiations, still needs to be approved by each EU member state and the European Parliament. It’s a key part of the legacy of the outgoing commission, headed by Jean-Claude Juncker, the biggest deal the EU has ever struck in terms of tariffs eliminated (four billion euros, or US$4.4 billion, a year), the first major trade agreement struck by Mercosur since it was formed in 1991. It also sends a political message to a world rocked by US President Donald Trump’s trade war with China: That the EU is still the major force behind free trade. But, if all of this is weighed against out-of-control deforestation in the Amazon, Macron is right and the agreement needs to be revised in a few specific ways that would make it work for, not against, climate goals.
Macron is outraged about Brazilian President Jair Bolsonaro’s contemptuous attitude toward rain forest conservation, thrust into focus by reports of wildfires raging in the Amazon as deforestation has accelerated under Bolsonaro and the country’s environmental agencies have become markedly less active in trying to safeguard the jungle from illegal logging. The far-right Brazilian leader has made no secret of prioritising agriculture over forest protection. His policies have led Germany to suspend the funding of conservation projects in Brazil; in response, Bolsonaro told German Chancellor Angela Merkel to “take your dough and reforest Germany, OK?”
That makes Merkel Macron’s potential ally in blocking the Mercosur deal as it stands. The increasingly powerful Greens are the strongest rivals of Merkel’s Christian Democratic Union party (and also potential coalition partners), and though the chancellor is strongly pro-trade, the optics of pushing for the deal’s approval now would be politically unfavourable.
The deal has other potential opponents, too. Irish Prime Minister Leo Varadkar has threatened to nix it because of Bolsonaro’s attitude – and in any case, he’d rather not allow cheap Brazilian beef on the European market, where it’ll be a threat to Irish farmers.
Even though European officials have defended the deal, saying it already imposed a commitment on the South Americans to follow their climate goals laid out in the 2016 Paris agreement and to avoid deforestation, it has been shown that more openness to trade increases deforestation rates in Brazil. So it’s appropriate for Macron and other European leaders to reconsider the Mercosur trade agreement in response to Bolsonaro’s behaviour.
There’s no need, however, to bury the deal altogether. There is a way to revise it so that it’s still beneficial for the parties without hurting the Amazon.
In 2017, the US Department of Agriculture put out a report on international trade and deforestation. The main idea of the study behind it was to figure out which products are the most deleterious to forests in different countries. In Mercosur members Brazil and Argentina, according to the report, beef and soybeans contribute the most to deforestation. As things stand, the deal’s sustainability chapter relies on private initiatives to limit these commodities’ impact; it mentions the so-called soy moratorium in Brazil – a voluntary pledge not to buy soy grown on recently deforested land in the Amazon (which led to increased deforestation in Brazil’s savanna, not covered by the moratorium). But under Bolsonaro, such initiatives aren’t likely to be effective.
The final edition of the trade deal should explicitly link trade quotas on forest-risk commodities, such as beef and soybeans, to keeping the forested area constant or even increasing it. It also should set up a reliable monitoring mechanism: Earlier this month, the head of the Brazilian institute that tracks deforestation was fired after Bolsonara called the institute’s data “lies.”
“You have to understand that the Amazon is Brazil’s, not yours," Bolsonaro told European journalists last month. Well, he needs to understand that the European market is the EU’s to regulate as it sees fit. Increased sales to this lucrative market should only be possible against firm environmental guarantees. And if the Mercosur deal could wait for 20 years, it can certain wait some more while this matter is cleared up.
by Leonid Bershidsky, Bloomberg view