Interview on the implications of the EU-Mercosur free trade agreement with Dr. Mauro Pucheta, Lecturer in Law at the University of Kent.
Can you briefly explain the comprehensive free trade agreements between the EU and the Mercosur, particularly with its main objectives and the areas that it covers?
In June 2019, the EU and Mercosur reached something important, which was a political agreement to sign this Comprehensive Free Trade Agreement. It is worth mentioning that negotiation informally started in 1992 and formally, there was an agreement signed in 1995. The objective was back then to strengthen trade between both regions, to guarantee the competitive integration of Mercosur into the world economy and then the consolidation of the EU presence in the region, which has always been very important. However, as you can imagine, objectives have evolved, and as I said, it's been almost 30 years. In terms of the objectives, increasing bilateral trade investment and lowering tariff and non-tariff trade barriers remain important objectives. This might make it easier for EU and Mercosur and firms to sell both goods and services into both regions and to invest. There is another important objective, which is to create more stable and predictable rules for trade and investment, particularly IP rules, food and safety standards, competition, and regulatory practice. And it's been argued that it might help to further integrate value chains between our two regions, hopefully making both industries on both sides more competitive. And then there is a third aspect that I'm more interested in, which is, the promotion of some common and shared values that go beyond trade, particularly sustainable development, which includes, climate change and labour. In terms of the agreement, it's been argued that the signing of this agreement could have a global impact. Because, if this agreement were to be signed – and as I said, this is a massive if – this could be the biggest trade block and the biggest trade agreement in the world. And this could send a message, particularly not just an economic message, but a political message in which nationalism seems to be on the trend, and then multilateralism seems to be a bit on retreat. This could be a message to just reject protectionism.
Can you expand a little bit on this political message between multilateralism versus protectionism, and what could be the implications here?
I would say up until 2010s, or early 2010s, it was accepted that the signature of the free trade agreement was the way forward. Since then, particularly after the post-2009 crisis, we have seen a lot of criticism of multilateralism. I think the signature of this agreement could be, in that particularly hostile context, a positive message in favour of multilateralism and also in favour of the free trade agreements as a way to further integration.
Can you delve into the specific labour standards and conventions that are likely to be a focus in this context?
Free trade agreements originally didn't have labour standards as an objective. It was about trade. However, we can see from the late 1990s, and mainly I would say the 2000s, a clear evolution, particularly at the EU level, that free trade agreement should not only pursue objectives linked to trade but also other, social and political objectives and within this context, sustainable development. Promoting values related to sustainable development has become an important objective, and strengthening workers' rights is one of these objectives. The 1995 Inter-Regional Framework Agreement between the European Community and Mercosur, which is the formal agreement that kicked off this negotiation, made explicit reference to the protection of fundamental labour rights, but it didn't say much, to be honest. However, the 2019 political agreement and I highlight political because this is not, yet the agreement has reinforced this sustainable development dimension and has referred to labour standards.
Are there any other challenges that you see in the adoption of this EU-Mercosur free trade agreement?
I think the challenges depend on where you look at this agreement. It's a bit paradoxical because the sustainable development aspect was presented as one of the positive aspects of this agreement. However, from an EU perspective, there are a lot of concerns about environmental issues. I mean those concerns were particularly raised during the period or with the election of Bolsonaro as the president of Brazil. I think they were reasonable, and they are still reasonably concerned about environmental issues because of the possible deforestation of the Amazon rainforest, because of the industrial production of beef which could be imported into the EU, but from the Mercosur perspective, some would question these agreements. I mean the first one is the symmetry of the agreement. If you think about the GDP population trade relationship, public procurement rules.
I think we can also think beyond these agreements. I think two ways have been proposed to solve these issues. One is within the agreement, and the other one is outside the agreement. So, if we're going to focus on the agreement, I think certain things could be changed in terms of, reinforcing the environmental standards and making sure that the dispute's subtle mechanisms are probably more powerful. So just changing a bit the soft incentive-based approach adopted by the EU. Another important point could be dealing with some of the further concerns that Mercosur countries have, such as to what extent environmental issues are not just an excuse for protectionism but obviously in terms of the agricultural sector. Mercosur is more powerful. That's why Lula for instance recently mentioned that public procurement rules should be adjusted.
The other option is outside the agreement, and this is more like a practical option, which is to what extent is signing a free trade agreement, the right way forward in the context of a climate crisis? And I do understand that point. But the question is, whether we want to just strengthen free trade or not. And some of some people who argue for not signing this agreement, just simply don't want that. I think there could be an option forward, it would be a shame if we don't sign an agreement that is not just trade, is also political. And particularly in two regions that have a lot in common, they share political and cultural values. I think it could be a missed opportunity for both because not signing the agreement does not mean that Mercosur will not trade with other parts of the world. I mean, some people joke that China has become the 6th member of Mercosur.