The EU-Mercosur agreement and the trap of the geopolitical response to Donald Trump
Saskia Bricmont, Green shadow rapporteur for Mercosur & member of the European Parliament Delegation for Mercosur
Donald Trump's return to the White House and his erratic and protectionist ‘America First’ measures, which are provoking trade wars, are causing confusion and plunging the world into insecurity. The repercussions for Europe are numerous. One of them is the change in approach to trade agreements. Yet, this should come as no surprise, because every time the EU is faced with a shock, the advocates of the most far-reaching liberalisation see it as an argument for opening negotiations and speeding up the conclusion of new agreements. This has already been the case in response to covid19 and the war in Ukraine, in order to boost the European economy and diversify our value chains. The geopolitical argument of the agreements has gradually been raised to a higher level, and this has been particularly true since the actual increases in US tariffs were announced against Mexico, Canada and China
The pro-market majority in Europe sees the mess created by Trump as yet another incentive to consolidate the constellation of international free trade agreements, starting with the ratification of the EU-Mercosur agreement. This is the geopolitical response put forward by the EU but this response is short-sighted, naive and counter-productive.
Overestimating the influence
of the economy
First of all, the supporters of this approach make the mistake of thinking that closer trade ties will lead to solidarity on the international stage that will thwart Trump's transactional approach. This ignores Javier Milei's proximity to Donald Trump, whose hatred of the United Nations Charter, of checks and balances and climate scepticism are just a few examples of the many detestable things they have in common. Same for Brazil's proximity to China within the BRICS, which they co-foundedalong with Russia! - to challenge the westernisation of the world economic order. It would also seem that everyone has forgotten Lula's statements on the war in Ukraine, suggesting that the blame was shared and that Ukraine should cede Crimea to its aggressor?
We should also remember that the German Chancellor, Angela Merkel, had gambled on closer energy and economic ties with Russia, and that our dependence on Russian hydrocarbons hampered our response to the war in Ukraine. This shows that playing the economic partnership card does not necessarily have an impact on political rapprochement
Risk to strategic sovereignty
The EU-Mercosur agreement has been widely criticised for concerns about the rights of indigenous peoples, the risks of increased deforestation, the massive use of plant protection products banned in Europe because of their toxicity, and unfair competition for our farmers, whose sector is already suffering
In reality, the EU-Mercosur agreement is also undermining our strategic sovereignty with the inclusion of a ‘rebalancing mechanism’ requested by the Mercosur countries since mid-2023. Under this mechanism, the Mercosur countries could obtain compensation if they feel that new measures (terms defined very broadly) adopted by the EU harm their economic interests, including their exports. For example, if the EU were to extend the scope of the anti-deforestation regulation or the Carbon Border Adjustment Mechanism (CBAM), improve consumer protection or lower the
application thresholds for companies (including foreign companies) covered by the Corporate Sustainability Due Diligence Directive, these measures could be challenged by Mercosur countries. Even if they comply with the other provisions of the EU-Mercosur agreement and respect WTO rules. The Commission defends itself by arguing that it will be very difficult for them to demonstrate the causality, but the worm is in the fruit: there is a real risk that the EU will no longer take initiatives (regulatory chill) or will resign itself to paying the price for measures deemed necessary in Europe. This is a serious attack on our strategic sovereignty, which puts the EU in a vulnerable position, and is all the more serious given that countries currently negotiating with the EU, such as India, Indonesia and others, are paying close attention to this mechanism, which they would also like to see included in their future agreements with the EU. The EU has opened a Pandora's box and is agreeing to tie its hands to third countries.
Our strategic sovereignty is also under threat when our European agricultural model is sold off and subjected to unfair competition. Is it any wonder then that less than 10% of farmers are under 35 years of age and that more than 30% of farmers are over 65 and are struggling to pass on their farms to younger generations? Distorting our agriculture means jeopardising our food security, the first domino of any strategic sovereignty, as many countries experienced when the war in Ukraine deprived them of wheat. We cannot continue along this path at a time when geopolitical, climatic and democratic issues are intertwined and require the European Union to ensure its strategic autonomy.
Forging alliances
If the EU is looking - and rightly so - for allies on the international stage, it could start by supporting developing countries. However, the EU is alienating them by making reform of the Generalised System of Preferences (preferential access to the European market for these countries) conditional on the readmission of irregular migrants present on European territory, or by refusing to transfer patents and technologies to them in the midst of the Covid-19 pandemic. It should also be more proactive in providing technical and financial support for achieving the Sustainable Development Goals, which, even if they were included in the mission statements sent by the President of the Commission to all the future members of her team, will not be achieved by 2030.
The new Clean Trade and Investment Partnerships announced by the President of the Commission as soon as she was re-elected and included in the Compass for Competitiveness may open up a new perspective. They seem to point the way to more comprehensive and attractive arrangements for our partners, highlighting the inadequacy of traditional trade agreements to meet new needs. They need to be deployed in such a way as to ensure that our partners really benefit from them.
Falling into Trump's trap
Finally, given the persistent differences of opinion between Member States, but above all within the European public, signing the EU-Mercosur agreement risks fuelling populism and increasing mistrust towards the ‘elites’ and the ‘Europe of Brussels’. Ratifying the EU-Mercosur agreement, with all its imperfections, would be tantamount to falling into the trap set by Trump and his friends and admirers who abhor multilateralism, the rule of law and the European project.