After more than 20 years of negotiations, the European Union and the Mercosur countries have signed a historic trade agreement meant to promote unprecedented industry relations between Europe and South America. Although accompanied by grandiose promises of sustainability and mutual benefit, the EU-Mercosur deal’s increased trade in beef, soy, and other commodities will accelerate deforestation, fuel climate emission, and expose the loopholes in the EU’s already shaky green legislation.
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The EU-Mercosur Agreement is a major trade deal between the European Union (EU) and the Mercosur bloc, which includes Argentina, Brazil, Paraguay, and Uruguay. The deal was finalized between December and January, after more than two decades of negotiations, and it is currently the largest trade agreement ever signed between the two blocs.
It represents a landmark deal in the EU’s trade policy, as well as in its external policy and international relations. EU-Mercosur heralds a new era of transatlantic relations, opening up an unprecedented partnership between the bloc and Latin America.
The objectives of the EU-Mercosur are very ambitious. The deal aims to eliminate tariffs on over 90% of goods traded between the regions; it provides preferential access for South American agricultural products (such as beef, poultry, sugar, and soy) to the EU market, and, in return, opens Mercosur’s highly protected markets to European industrial goods, like cars, machinery, and chemicals. This exchange, which has been dubbed a “cows-for-cars” trade deal, is a minefield of potential environmental, economic, and humanitarian troubles.
Environmental Impacts of the EU-Mercosur Deal
Trade and climate change are inextricably connected: from extraction of raw materials and manufacture to transport and distribution, trade amounts to roughly 30% of all greenhouse gas emissions worldwide.
The EU-Mercosur partnership agreement is purportedly meant to represent a model of sustainable development, promoting green transition, climate neutrality, and respect for human rights. A dedicated annex on Trade and Sustainable Development (TSD) explicitly refers to the Paris Climate Agreement as an ‘’essential element’’ of the deal, meaning that either a violation of the terms of the agreement or a party’s withdrawal from the agreement could result in a suspension of the trade deal. The Paris Agreement includes a pledge by the EU and Mercosur to move towards climate neutrality by 2050, and assurance from Brazil to halt illegal deforestation nationally, specifically in the Brazilian Amazon. It also includes a binding commitment to combat illegal logging and tackle deforestation.
Despite all of its environmental pledges, the EU-Mercosur deal raises several questions regarding its impacts.
The most obvious contradiction to its climate guarantees is a very elevated deforestation risk. The agreement is expected to significantly boost trade in highly environmentally impactful goods (such as soy, poultry and beef), all of which have been historically linked to widespread deforestation. Given that deforestation is a major contributor to climate change, the growing demand for beef and other agricultural goods has serious ramifications for the ecological and climate crises.
Beef is one of the major goods included in the EU-Mercosur agreement. Over 75% of beef imports into the EU came from Mercosur countries in 2019, with over 35% from Brazil alone. The EU is also the importer of roughly 35% of Brazilian processed meat products, such as canned meats, beef jerky, and frozen products.
Globally, 80% of the land cleared for cattle grazing and animal feed monocultures is used for meat production. In Brazil, the world’s largest beef exporter, cattle farming is the single largest driver of Amazonian deforestation and conversion of native vegetation to areas of pasture. Here, the rate of deforestation increased by 60% between 2016 and 2020, with approximately 580,000 hectares (5,800 square kilometers) of forest cut down in one year to create pastures.
The EU-Mercosur trade deal will increase beef imports from the Mercosur region by up to 99,000 tonnes per year. Studies estimate that up to 700,000 hectares of forests in the first year could be destroyed due to increased beef exports alone, with sustained additional losses following the initial spike.
An aerial view of sections of land in Paraquay’s Chaco which have been deforested to make way for cattle ranches. Photo: Wikimedia Commons.
The deal also risks accelerating deforestation in other critical biomes in South America. The Gran Chaco, the second-largest forest in the continent, spanning Argentina and Paraguay, is one of the areas with the highest deforestation rates of the planet. The massive green areas of the Gran Chaco provide a critical bioclimatic balance, and are home to millions of native animal and plant species as well as 9 million people.
To make room for cattle farming and crops, 25% of the Gran Chaco in Argentina has been deforested. The region is now home to 33% of the national cattle stock, while over 67% of Paraguay’s beef exports originate from the Gran Chaco. Increased agricultural exports risk accelerating deforestation and land grabbing.
How the EU-Mercosur Can Bypass EU legislation
The Mercosur agreement seems to inevitably be coming at odds with the recent European Union Deforestation Regulation (EUDR), the bloc’s flagship legislation against global deforestation. The regulation requires importers to demonstrate that their products come from deforestation-free supply chains, and not from land deforested after 2020. The scope of the EUDR covers palm oil, beef, soy, cocoa, coffee, timber and rubber, as well as “derived” products such as furniture and chocolate.
According to the TSD chapter of the EU-Mercosur deal, the EUDR remains in force regarding products imported under the agreement, to ensure that goods associated with deforestation are placed into the EU market.
The EUDR requirements are restricted by the agreement’s Trade and Development annex. Several chapters are clearly intended to allow Mercosur countries to influence how EDUR is implemented by the Commission. A study by environmental law firm ClientEarth highlights how the agreement allows third country interference in the enforcement of EU law. The mechanism for rebalancing concessions in the agreements could fundamentally neutralize the EUDR, as it could potentially interfere with a state’s authority to assess whether EU companies are carrying out adequate due diligence of their own products.
The deal also contains insidious loopholes. Many agricultural product imports into the EU run the risk of accelerating deforestation in areas not protected by the Deforestation Regulation, such as the Cerrado area. The Cerrado is a large tropical ecoregion in central Brazil, and is the second-largest ecosystem after the Amazon rainforest. As the main habitat type of the Cerrado is the savannah, the legal definition of “forest” employed in the EUDR does not cover the Cerrado ecosystem.
Soy plantation in Colombia. Photo: Alliance of Bioversity International and CIAT/Flickr.
The Cerrado region is largely used for soy cultivation, and much of the soy imported into Europe originates there as well as in the southern Brazilian Amazon. Soy fields are considered the second-largest drivers of deforestation in the region: in 2022, soy plantations in the Cerrado were associated with roughly 375.000 hectares of deforestation and ecosystem conversion. Large swaths of native vegetation are cleared out to make space for widespread soy monocultures, with dramatic impacts: huge climate emissions (49 million tonnes of CO2 from Cerrado soy deforestation in recent years), biodiversity loss, increased vulnerability in droughts and fires, and the loss of the ability of the region to act as one of the world’s most important carbon sinks.
The large soy production is largely due to its use as one of the cheapest sources of animal feed, particularly cattle. The increase in beef production caused by the trade deal will consequently increase the soy production necessary to feed livestock, creating a vicious cycle of further deforestation caused by agricultural expansions of both sectors, in which one sustains the other.
The EU-Mercosur deal offers virtually no protections in avoiding environmental degradation in the Cerrado. Unlike the Amazon, there is no comprehensive moratorium on soy-linked deforestation, risking leaving the Cerrado and similar ecosystems inadequately protected.
Indigenous Communities Left to Pay the Highest Price
Due to the fact that deforestation and agriculture are so closely related, the trade deal would increase the pressures on Indigenous people. The agreement provides no binding guarantees to protect their territories, forests, or fundamental rights, such as self-determination and informed consent.
As the deal is expected to drive up exports of soy, beef, and other agricultural commodities, the demand for land will increase. Much of this expansion will directly threaten Indigenous territories, both in terms of direct land grabbing, forced displacement, or through the degradation of the ecosystem to such extents that creates unlivable conditions.
The Articulation of Indigenous People of Brazil (APIB) has strongly opposed the deal, asserting that it explicitly threatens Indigenous lands and human rights. It does not guarantee the protection of Indigenous people’s rights, despite their inclusion in the International Labour Organisation convention. The EU-Mercosur fails to take into consideration the opinions of the local population using the UN-established principle of Free, Prior, and Informed Consent, instead using weaker language that allows projects or trade initiatives to proceed without full Indigenous approval.
Better Pathways for Sustainable Free Trade Agreements
Environmental commitments in the EU-Mercosur deal have been criticised for being ambiguous and insufficient. The agreement only contains a non-binding pledge to halt deforestation after 2030, which is less ambitious than Brazil’s own current target of achieving zero deforestation by 2030, leaving a large implementation gap until then. The lack of enforceable measures may allow deforestation to continue or even intensify in the short term.
Better pathways for sustainable trade require enforceable standards, transparency, and accountability. To ensure trade agreements contribute to environmental protection and human rights, binding clauses on these issues must be included and effectively enforced. Civil society participation, parliamentary scrutiny, and greater transparency throughout the negotiation and implementation process play a crucial role.
One key reform could be the mandatory inclusion of Sustainability Impact Assessments (SIAs) before ratifying any trade deal. These assessments should evaluate the agreement’s alignment with the EU’s climate and development objectives. Yet, the EU-Mercosur agreement notably lacks a chapter on sustainable food systems, and the European Ombudsman has criticized the Commission for finalizing negotiations without completing the sustainability assessment.
Another essential pathway is the introduction of mandatory environmental and human rights due diligence legislation. This would require companies to identify and address risks of harm across their global value chains. It should include provisions for liability, access to justice for affected communities, and strong enforcement and sanction mechanisms. Such legislation would help prevent European companies from importing products linked to deforestation, slavery, or exploitative labour practices, and stop banks from financing such harmful operations.
Outlook
The EU-Mercosur agreement has the potential to reshape trade relations between Europe and Latin America, but it also raises serious concerns about its environmental and social impacts. While the deal makes broad references to sustainability and climate objectives, its vague and non-binding commitments risk undermining the EU’s own climate and human rights standards.
As it stands, the agreement risks fuelling deforestation, biodiversity loss, and land conflicts, while simultaneously weakening the enforcement of the EU Deforestation Regulation and ignoring key ecosystems like the Cerrado. The lack of enforceable protections, limited transparency, and insufficient consultation with affected communities further call into question the legitimacy and sustainability of the deal.
To avoid these pitfalls, the EU must rethink its approach to trade. Future agreements should incorporate binding environmental and human rights clauses, require full sustainability impact assessments before ratification, and link trade policy more clearly with the EU’s external climate and development goals. Above all, civil society oversight, access to justice for affected communities, and corporate accountability through robust due diligence frameworks must be at the heart of sustainable trade.
Only by aligning trade with its core values can the EU deliver on its promise of a green and just transition, one that does not come at the expense of people, forests, or the planet.
Featured image: Marcelo Perez del Carpio/Climate Visuals Countdown.
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