The EU-Mercosur agreement was concluded by the EU Commission and the four countries of the Mercosur trading bloc (i.e., Argentina, Brazil, Uruguay and Paraguay) on June 28th, 2019, after two decades of negotiations. It mainly aims to reduce export tariffs in both markets through tariff liberalisation, but also provides free provision of services, greater protection over local gastronomical specialties and access to public procurement contracts. According to forecasts of the EU Commission, the commercial pact will save the bloc over 4 billion euros on tariffs a year, making it the largest international trade agreement ever to be concluded by the EU.
Ratification of the deal is due to begin next year. The process may however prove quite problematic, due to the fact that it has to be approved and ratified nationally by every Member State - and France, Ireland and Austria already had something to say on the matter. In particular, the agreed large import quotas from Latin America are not well embraced by EU farmers.
A further complication, as confirmed by Officials of the EU Commission, has been placed by a recent decision of Brazilian president Jair Bolsonaro. The 2009 decree that established sugarcane agro ecological zoning and banned production of ethanol (especially in the Amazon Forest and Pantanal wetland) is officially revoked. Brazil is currently the second largest producer of ethanol from sugarcane worldwide and it approved the decree a decade ago when the country was leading a project to incentivise the global production and consumption of that biofuel, as it is less polluting than gasoline. The revocation has been harshly criticised by several environmental organisations, including WWF.
One goal of the EU-Mercosur agreement was indeed to export up to 650,000 tonnes of ethanol sugarcane from Brazil. Commentators criticise Bolsonaro’s decision because they see no justification for expanding into protected areas when available land is plentiful elsewhere, such as in South Brazil. Moreover, from an economical viewpoint, it compromises the exports of the other 98.5% of the production from the country, says Federal University Professor Minas Gerais. Not less importantly, there is also a reputational risk for Brazil to be associated with deforestation in the Amazon, from which the sugar and alcohol sectors have managed to be completely detached until today.
Executive director of Amigos da Terra Amazonia Brasileira, Mauro Armelin, stated that the new decision raises concerns due to the fact that it stimulates land speculation in an area already rife with numerous counterfeit land titles and huge illegal land grabs. Brazilian Government defended the new decree and affirmed that deforestation will be sufficiently protected due to new laws which have been implemented. It also added that previous cultivated lands were outdated and thus a barrier to sugarcane-based biofuels development. On that note, the Sugarcane Industry Union (UNICA) also mentioned that the previous decree was outdated, yet adding that the sector is committed to sustainable development, “committed to a zero deforestation policy”.
Whether the deal will be ratified or not by all the EU member countries is not clear, but what is certain is that this last policy enacted by the Brazilian president risks to seriously jeopardize the agreement.
Antonio Maccioni
Ratification of the deal is due to begin next year. The process may however prove quite problematic, due to the fact that it has to be approved and ratified nationally by every Member State - and France, Ireland and Austria already had something to say on the matter. In particular, the agreed large import quotas from Latin America are not well embraced by EU farmers.
A further complication, as confirmed by Officials of the EU Commission, has been placed by a recent decision of Brazilian president Jair Bolsonaro. The 2009 decree that established sugarcane agro ecological zoning and banned production of ethanol (especially in the Amazon Forest and Pantanal wetland) is officially revoked. Brazil is currently the second largest producer of ethanol from sugarcane worldwide and it approved the decree a decade ago when the country was leading a project to incentivise the global production and consumption of that biofuel, as it is less polluting than gasoline. The revocation has been harshly criticised by several environmental organisations, including WWF.
One goal of the EU-Mercosur agreement was indeed to export up to 650,000 tonnes of ethanol sugarcane from Brazil. Commentators criticise Bolsonaro’s decision because they see no justification for expanding into protected areas when available land is plentiful elsewhere, such as in South Brazil. Moreover, from an economical viewpoint, it compromises the exports of the other 98.5% of the production from the country, says Federal University Professor Minas Gerais. Not less importantly, there is also a reputational risk for Brazil to be associated with deforestation in the Amazon, from which the sugar and alcohol sectors have managed to be completely detached until today.
Executive director of Amigos da Terra Amazonia Brasileira, Mauro Armelin, stated that the new decision raises concerns due to the fact that it stimulates land speculation in an area already rife with numerous counterfeit land titles and huge illegal land grabs. Brazilian Government defended the new decree and affirmed that deforestation will be sufficiently protected due to new laws which have been implemented. It also added that previous cultivated lands were outdated and thus a barrier to sugarcane-based biofuels development. On that note, the Sugarcane Industry Union (UNICA) also mentioned that the previous decree was outdated, yet adding that the sector is committed to sustainable development, “committed to a zero deforestation policy”.
Whether the deal will be ratified or not by all the EU member countries is not clear, but what is certain is that this last policy enacted by the Brazilian president risks to seriously jeopardize the agreement.
Antonio Maccioni