Joint note from the Ministry of Foreign Affairs and the Ministry of Agriculture, Livestock and Supply on the French government's report on the MERCOSUR-EU Agreement

The Brazilian government clarifies the following aspects regarding the report “Dispositions et effets potentiels de la partie commerciale de l'Accord d’Association between l’Union européenne et le MERCOSUR en matière de développement durable” (Provisions and potential effects of the trade part of the Association Agreement between the European Union and MERCOSUR on sustainable development):

• In a first preliminary examination of the report commissioned by the French government on the impact of the MERCOSUR-EU Agreement, released last Thursday, the Brazilian government observes the need to increase awareness about the Brazilian reality as well as to consider technical data available on the topic. 

• For the time being, it affirms, in the first place, that the above-mentioned Agreement does not represent any threat to the environment, human health and social rights. On the contrary, it reinforces multilateral commitments and aggregates best practices in this area. 

• The report presents arguments which are not based on technical criteria and which suggest that the entry into force of the aforementioned Agreement will have a negative environmental impact, as it allegedly leads to increased deforestation and puts the efforts to combat climate change under international agreements at stake. 

• The core of the report's criticisms of the environmental aspects of the Agreement concerns the relationship between agricultural activity, especially beef production, and deforestation.  

• The main argument is based on the following syllogism: (1) the MERCOSUR-EU Agreement will result in a significant increase in beef exports from MERCOSUR countries to the EU; (2) the expansion of livestock production in MERCOSUR always leads to an increase in deforestation; (3), therefore, the MERCOSUR-EU Agreement will cause a significant increase in deforestation in the MERCOSUR countries, as well as an increase in greenhouse gas (GHG) emissions as a result of deforestation. 

• Brazil has already proved that it is able to increase its beef, soy and corn production while reducing deforestation. From 2004 to 2012, deforestation in the region called ‘Legal Amazon’ dropped 83%, while agricultural production increased 61%. In the same period, cattle herd grew by more than 8 million head, reaching 212 million in 2012. These figures are part of a historical trend of Brazilian agricultural intensification and of an increase in resulting productivity gains, in line with environmental preservation. 

•  The increase in Brazil’s production is the result of technological innovation without the need to expand new areas. The potential for increased productivity is huge, since the adoption of existing technologies varies among producers, not to mention the technologies that will still be developed by research bodies dedicated to the development of tropical agriculture. 

• With regard to the impact of GHG emissions, the LSE concluded that the impact resulting from the entry into force of the Agreement is negligible. The study indicates that after the entry into force of the Agreement, MERCOSUR will be responsible for less than 1/6 of the EU's GHG emissions. 

• The authors of the report also seem to be unaware of the fact that the Brazilian traceability system for beef exports to the EU is already fully in effect. Brazil’s meat exports to the European bloc must already comply with the community regulation on traceability, even before the entry into force of the Agreement between MERCOSUR and the EU, which will not reduce the level of European requirements in this respect at the time of its implementation.  

• It should be stressed that the report of the evaluation committee on the aforementioned Agreement commissioned by the French government reveals the real protectionist concerns of those who commissioned it by dealing with the agricultural concessions made by the EU to MERCOSUR. 

• In the MERCOSUR-EU Agreement, when it comes to products of agricultural sensitivity for the parties, the blocs made offers in general with quotas. This was the case of the tariff quota for beef and chicken in the case of the European Union, for example, and the quotas for powdered milk and garlic, in the case of MERCOSUR. As there are limits to trading in these cases, it is not possible to imagine exaggerated incentives to the blocs’ exports of products traded with quantitative limitations. 

• The report also ignores the progressive strengthening of environmental legislation in the country. Brazil was a pioneer in conservation policies, with the implementation of its first Forest Code in 1934. Thanks to this long-standing effort, native vegetation covers more than 66% of the Brazilian territory. Cultivation is limited to about 30% of the territory, of which 8% is dedicated to agriculture and around 22% to livestock production, according to Embrapa Territorial (Brazilian Agricultural Research Corporation). This scenario raises Brazil to the level of environmental power. 

• The current Forest Code establishes general rules on the protection of native vegetation. It is the only environmental legislation in the world that stipulates the allocation of areas of private rural properties to preservation without offering any compensation. For example, landowners in the Amazon are required to set aside 80% of their property to environmental conservation. This is beneficial to the global population and it is done by the Brazilian rural producer, without any compensation or incentive from the Government. This producer, who acts in accordance with the law and guarantees environmental preservation, is the one who expects to benefit from the Agreement. We invite farmers around the world to join this Brazilian initiative, making their contribution to the preservation of biodiversity, to stop global warming and to help promote food safety.  

• The MERCOSUR-EU Agreement recognizes the important relation between social and economic development and the protection of the environment, by establishing, in its chapter on trade and sustainable development, that trade liberalization can make a positive contribution to the environmental, economic and social aspects of sustainable development in the MERCOSUR countries. 

•  Mercosul seeks to implement a modernizing agenda with a view to reconciling increased competitiveness/productivity with high standards of environmental sustainability. As part of this agenda, the bloc concluded free trade agreements with the EU and EFTA in 2019. Both agreements contain chapters dedicated to strengthening sustainability and include technical cooperation activities for the preservation of biodiversity, management of native forests, fisheries and animal life, in addition to high standards of protection of working conditions, in accordance with the objectives of the 2030 Agenda. All environmental provisions have been jointly agreed by the parties and extend far beyond most EU trade agreements in force. 

•  As proof of the high commitment to environmental issues, the precautionary principle is present in the MERCOSUR-EU agreement. According to the principle, if there is objective evidence that an activity may cause irreversible damage to the environment, the absence of absolute scientific certainty should not be used as a reason to postpone effective and economically viable measures to prevent environmental degradation. 

• Nor will the Agreement decrease the appropriate level of sanitary, phytosanitary and food safety sovereignly established by the parties. The Agreement also enhances bi-regional and multilateral cooperation on issues such as animal welfare, biotechnology, maximum residue limits in food and combating antimicrobial resistance. It should be noted that the food exported by MERCOSUR already complies with the highest sanitary, phytosanitary and safety standards, in accordance with the parameters recommended by international reference organizations and mechanisms.  

• The report's conclusion that the Agreement's disciplines in the areas of public health and food safety could leave European citizens worse off than before the Agreement is unfounded. The disciplines negotiated in the Agreement were inspired by multilateral guidelines already taken by the parties and even disciplines already in force in the EU, which go beyond the WTO. 

• As for geographical indications (GI), with the entry into force of the Agreement, MERCOSUR will protect 355 European GI, in contrast to the 340 GI recognized by Mexico and 158 by Canada. EU GI policy has resulted in considerable returns for European producers which, however, the report appears not to recognise. 

• Many of the report's conclusions reflect the protectionist concerns of European segments, illustrating the argument that tariff preferences should only be given to products that follow European production methods. However, it cannot be ignored that European edaphoclimatic conditions are different from those of MERCOSUR; consequently, production methods cannot, in many cases, be the same in order that they do not become unsustainable. This is the case of double or triple harvesting in the same area per year, which is not feasible in the European continent. 

• One notices the fact that the report advocates bilateral safeguard measures with no time limit. The bilateral safeguard mechanism is intended to assure the parties that they will be able to adjust during the transition period of the agreement, that is, when and if the reduction in bilateral tariffs is causing market disruption. At the end of the agreement's transition period, any disturbances would no longer stem from the opening of trade to a certain counterparty, but from other factors, such as adverse weather conditions, new production methods, among other reasons, and therefore should not make use – in this case, distorted – of the bilateral safeguard mechanism. 

• Finally, it seems odd that the report focuses on products of high European agricultural sensitivity and uses non-commercial arguments (such as the supposed risk of deforestation) to guarantee economic protection to certain producers. 

• Based on the above, the Brazilian government refutes any claim that the agreement would increase the destruction of the Amazon forest. It reaffirms that the agreement brings additional commitments to multilateral environmental and trade rights to regulate current and future trade flows for the sake of ensuring environmental sustainability. 

• The entry into force of the Agreement has the potential to feed the virtuous cycle in both blocs as to:

          - Improvement of economic conditions,

          - Increased quality of life for citizens, with job creation and income, and reduced food and bioenergy costs,

          - Development and adoption of technologies to improve the efficiency of economic sectors,

          - Strengthening environmental preservation, and reducing GHG emissions, as it reinforces the commitment of the Paris Agreement. 

• The non-enforcement of the MERCOSUR-EU Agreement would send a negative message and would establish a clear disincentive to the country's efforts to further strengthen its environmental legislation. Failure to approve the Agreement would also have negative social and economic implications, which could further aggravate the region's environmental problems. Failure to ratify it will imply an important gap in the strengthening of the relationship between the parties and in the reiteration of a sustainable and responsible free trade, which will provide prosperity with the preservation of nature, resulting from the improvement of economic conditions.

Ministry of Foreign Affairs - MRE

Ministry of Agriculture, Livestock and Supply - MAPA