"Things go seriously wrong in the MERCOSUR-region"

EZA-Member ACV comments the current state of the art of the trade agreement between EU and Latin American countries.

Banners of the EU and the MERCOSUR (photo: shutterstock)

One year ago the EU signed an agreement in principle for a comprehensive trade agreement with the countries of the MERCOSUR region. The agreement still has a long way to go before it is effectively adopted by the European institutions, but there is already a great deal of opposition to the agreement in many EU Member States, including Belgium.

Why this resistance?  Does this trade agreement comply with the principles set out by our ACV Transition Congress for a trade policy that strives for decent work and a socially just transition? (Note: The ACV is linked to us through our member BIE )

Why do the EU and MERCOSUR want this agreement?

MERCOSUR is the largest trading block in Latin America, with the four countries Brazil, Uruguay, Paraguay and Argentina.  Together they form a free trade zone of 265 million inhabitants. Brazil alone accounts for 209 million inhabitants and more than half of MERCOSUR's income.

For the EU and MERCOSUR it is an important agreement, as it aims to create a free common market of about 710 million consumers, accounting for about a quarter of the world's income. The main objective of the agreement is the liberalisation of customs tariffs. MERCOSUR would free up 91% of import tariffs on EU products in 15 years and the EU will free up 92% of import tariffs on Mercosur.

The export products of the MERCOSUR countries are mainly agricultural products, the big three 'soy, beef and sugar' and also the biofuel ethanol, rice, corn and flour. Exports from the EU to MERCOSUR are mainly industrial products, primarily the access of the automotive sector and more broadly the technology sector to the MERCOSUR market. The agreement is therefore sometimes referred to as a deal of cars for cows. So it is not surprising that the drivers for the agreement in the MERCOSUR region are mainly the agro-business and in the EU the industrial sector - especially the automotive sector, and even more so from Germany.

For the European Commission, this agreement fits in with an offensive vision of the EU's position in the world. Because multilateralism and cooperation within the World Trade Organization for global trade cooperation are becoming increasingly difficult, the EU wants to conclude bilateral trade agreements with strong trade regions and economically strong countries. It is important for the EU that European standards and norms in industrial products and services then become global standards. This will strengthen your position on the world market. What is behind it is also a vision of economic development of the EU with a focus on conquering export markets outside the EU. This vision is of course propagated by the export countries within the EU, such as Germany, the Netherlands and the Scandinavian countries. Due to the EU's large trade surplus with the rest of the world (3.5% of GDP), it remains to be seen whether further strengthening of exports is desirable and will not cause problems for some partner countries.

Protest votes: Respect for core labour standards?

For us as ACV, the primary concern is that trade seeks to promote decent work and that respect for the core labour standards of the International Labour Organisation is therefore at the heart of any EU trade agreement. This includes the protection of our own employees against social dumping, with a level playing field for both parties in the trade agreement!

But with respect for and compliance with labour and human rights, things are going seriously wrong in the MERCOSUR region and in Brazil in particular. In 2020, Human Rights Watch published a devastating report on respect for human rights in Brazil under the Bolsonaro regime. The report reports no less than 6,600 deaths from police violence, torture of prisoners, violations of the rights of children, migrants, women, sexual minorities and indigenous peoples. In its Global Rights Index, the International Trade Union has put Brazil on the list of the world's 10 worst countries in terms of respect for labour rights, due to violence against trade unionists and the breakdown of the right to collective bargaining. Brazil has not ratified the International Labour Organization's core labour standard 87 on trade union freedom. The other MERCOSUR countries have ratified all core labour standards, but most of all they have failed to respect them. In Brazil there is a major problem of child labour and forced labour, especially in the large export-oriented farms or latifundia. In the period 2000-2015, great progress was made in programmes to combat forced labour and child labour, especially under the government of President Lula (of the Labour Party), but these programmes were reversed under Bolsonaro. In general, Mercosur countries made progress in social development, quality jobs, decent incomes and social protection and the fight against inequality in the period 2000-2015, but in Argentina and Brazil, social development and labour rights have since been reduced under the right-wing pro-business governments of Macri and Bolsonaro.

And respect for environmental rights?

There are also major problems in the region when it comes to respect for environmental rights. Last year, large parts of the Amazon rainforest were on fire. Deforestation to make way for agro-business in the big three (soy, sugar, beef) continues in rapid succession, not hindered by the current Brazilian government. Environmentalists and NGOs fear that the EU-MERCOSUR agreement will further encourage these trends, which are damaging to the climate and the environment, by increasing export demand for these agricultural products from the EU. Farmers' organisations in Europe and in Belgium fear the unfair competition from the Latin American agro-business, which does not have to meet the same food safety standards. Enforcement systems are weak and the use of pesticides is high.

EU-MERCOSUR agreement no lever to promote respect for the environment and labour rights

The European Trade Union Confederation and the MERCOSUR Trade Union Platform, affiliated to the ICFTU, do not see the present agreement as a constructive framework for the promotion of decent work and a socially just transition. Fundamental objections for the trade unions are the lack of levers in the sustainability chapter of the agreement for the promotion of labour, environmental and human rights: compliance with these rights cannot be enforced, as no sanctions are foreseen in case of violations. In their declaration, Latin American and European trade union leaders also focus on the political context of this agreement. Is it opportune to conclude an agreement now with this government partner in Brazil, with its current state of human and labour rights and its disdain for democracy and the rule of law?

Agreed MERCOSUR-EU: how to proceed?

The EU-MERCOSUR cooperation agreement is a so-called mixed agreement. It includes a trade agreement - since the Lisbon Treaty it is an EU competence - but there is also a political cooperation agreement. If a separate agreement is made, the trade part only needs to be approved by the EU institutions (European Parliament, European Council and European Commission). The rest of the agreement must also be ratified by all the parliaments of the EU Member States. The parliaments of Austria, Ireland, France, Luxembourg, the Netherlands and, for Belgium, the regional parliaments of Wallonia and Brussels have already indicated that they cannot approve the agreement in its current form. Because the agreement is not coherent with the European policy and legislative framework for promoting ecologically and socially sustainable development. 

It is also clear to the ACV that this agreement does not meet the objectives we set for fair trade and better trade agreements. There is work to be done this autumn: awareness-raising campaigns in public opinion and among our members and, above all, advocacy among our politicians to make it clear to them that we want better trade agreements that focus on decent work and a socially just transition.

(Karin Debroey – ACV-CSC International & European department)