New French PM dashes hopes of a EU-Mercosur deal by Brazil G20 summit

French Prime Minister Michel Barnier reiterated France’s opposition to the EU-Mercosur free trade deal and confirmed his desire to seek a ‘blocking minority’, according to information obtained by Euractiv, dashing hopes of finalising the deal at the upcoming G20 summit in Brazil.

While some media reports pinned hopes on a conclusion of the agreement by the G20 summit in Brazil on 18 November, France and its new Prime Minister, Michel Barnier, continue to oppose it, at least in its current form.

The Mercosur Free Trade Agreement talks began between the EU and Mercosur countries of Argentina, Brazil, Paraguay and Uruguay in 1999 and was agreed on in principle in 2019, although never ratified. Involving a population of over 780 million people, the deal would eliminate some 93% of EU tariffs, making it the EU’s largest trade deal to date regarding tariff reduction. More Euractiv

​Mirror Clauses on Nature and Biodiversity Could Break Impasse  in EU-ASEAN Trade Talks

• Indonesian and Malaysian officials are meeting with their EU counterparts in September to discuss the problems they have with the EU Deforestation Regulations (EUDR)
• This meeting will presumably be a continuation of the previous meeting where the five points of concern to palm oil producing countries were brought up in the Joint Task Force..
• The EU’s push to conclude trade deals with MERCOSUR countries which include countries with high rates of deforestation may change the discourse of the Joint Task Force 

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Rather than waiting for the outcome of EU-MERCOSUR negotiations, Indonesia and Malaysia which have argued that their agricultural commodities, especially palm oil, are sustainable, should support France’s call for a mirror clause which has so far stalled the EU-MERCOSUR negotiations.

Credit: EURACTIV-Resistance increases over Austria’s ‘no’ to Mercosur deal

• ‘Mirror clauses’ is the idea that any imports of agri-food products must mirror all EU production standards. These can include, as examples, wage rates, environmental regulations, climate and animal welfare rules, or rules related to pesticides and herbicides.Arc2020
• A number of European livestock farmers’ unions recently addressed a letter to Ursula von der Leyen, President of the European Commission, to ask her to introduce mirror clauses in the trade agreement she is about to sign with Mercosur.

This agreement particularly impacts European livestock farmers, as it will once again increase EU meat imports, to the detriment of our farmers, the environment (carbon balance), health security (use of growth-promoting antibiotics) and animal welfare (factory farms with higher stocking densities than in the EU, less protective transport conditions, cage farming). 
Will the Commission take heed of this legitimate call from our farmers? Europarl EU

Most likely not, if the bilateral push from both the European Union and Mercosur countries to complete a trade deal in these few months is any indication. Dutch support for France’s firm stance on a mirror clause in trade deals may not be enough to stop an EU-Mercosur trade deal. Not with eleven EU member countries pushing for an EU-Mercosur deal.

If the EU does push through an EU-Mercosur trade deal that disregards wage rates, environmental regulations, climate and animal welfare rules, or rules related to pesticides and herbicides, it may provide EU trade partners in Southeast Asia a precedent from which they can conclude their own trade talks with the EU.

EU-Mercosur trade deal as a precedent for EU-ASEAN talks

The EU’s eagerness to complete the EU-Mercosur trade deals may have something to do with the impending loss of the EU’s influence as Mercosur countries push for trade deals with China.

This is part of the threat to the EU’s economies as forewarned by Agathe Demarais.

Deepening ties with Mercosur countries makes perfect sense as part of the EU’s de-risking efforts to diversify economic ties away from China. Further delays in signing a free trade deal would push Latin America closer to China’s orbit – for good. European Council on Foreign Relations

Agathe Demarais appears to have nailed the issue as MEP Bernd Lange tweeted on EU-Mercosur talks this week with:

While #EU #Mercosur trade agreement might not be the best one in history, negative consequences of no agreement probably far outweigh the overall impact of an imperfect agreement.
1️⃣ deal only possible if complemented with binding agreement on workers' rights, environment, deforestation
2️⃣ we have unilateral instruments (#EUDR, forced labour) to address sustainable consumption
3️⃣ global context of increasing competition, protectionism and unilateralism
4️⃣ agreement creates leverage and space for dialogue, also on sustainability issues
5️⃣ space not taken up by EU will be taken up by others
🔉Only one logical conclusion: it is imperative to engage in sustainable partnerships and assess all the elements on the table together.

The EU’s trade negotiations with ASEAN countries, notably Indonesia have been deprioritised as the EU sits complacently on Indonesia’s grievances against EU trade demands of Indonesia. An agreement on the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) which Indonesia’s Trade Minister Zulkifli Hasan wants to complete soon looks doable once Bernd Lange's points are applied to IEU-CEPA.  

The same holds true for Malaysia where a recent Cabinet meeting gave approval for Malaysia to officially negotiate with the European Union (EU) to conclude a free trade agreement (FTA) according to Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.

An EU-MERCOSUR trade deal based on the points made by MEP Bernd Lange would give Indonesia and Malaysia a strong precedent as their respective agreements would also provide space for dialogue and leverage on sustainability issues. While the EU’s unilateral instruments in EUDR have been decried by Indonesia and Malaysia, both countries have made commitments on workers rights, environment and deforestation. These commitments could lay the groundwork for mirror clauses between the EU and Indonesia and Malaysia insofar as the points made by Bernd Lange are concerned.

Making the case for Mirror Clauses

On top of that, if Ursula von Der Leyen sticks to the six commitments she made as outlined by Alan Matthews, there may be further grounds for Indonesia and Malaysia to make their case based on mirror clauses based strictly on her agenda.

According to Alan Matthews, Ursula von Der Leyen made “six specific commitments intended to show that Europe will protect its own food sovereignty and those who provide for us all”

• To build on the recommendations of the Strategic Dialogue for Agriculture to “present a Vision for Agriculture and Food in the first 100 days looking at how to ensure the long-term competitiveness and sustainability of our farming sector within the boundaries of our planet”;
• To defend an EU income policy for Europe’s farmers as “it is vital that farmers have a fair and sufficient income. They should not be forced to systematically sell their products below production costs”;
• To ensure that the common agricultural policy is more targeted “and finds the right balance between incentives, investments and regulation”;
• To enable farmers “to work their land without excessive bureaucracy, support family farms, and reward farmers working with nature, preserving our biodiversity and natural ecosystems and helping to decarbonize our economy on the way to net-zero by 2050”;
• To “correct existing imbalances, strengthen farmers’ position in the food value chain and further protect them against unfair trading practices”

If Ursula sticks to her commitments, a mirror clause for palm oil imports would be a good solution to solve the impasse in trade talks. Palm oil producing countries can match her commitments to protect their farmers based on the following points.

• The sustainability of the palm oil industries is clearly within the boundaries of our planet as it uses the least land to produce the world’s most consumed vegetable oil.
• Indonesian and Malaysian palm oil farmers face the same problem as European farmers where their products are frequently sold below production costs. 
• Both Indonesia and Malaysia have supported family farms with various efforts including subsidies for replanting in Malaysia and Indonesia in order to prevent deforestation. In Ursula’s words, this would mean “working with nature.”

Protecting palm oil farmers against unfair trading practices from the EU will however require the EU Commission to spare palm oil farmers from the demand to trace palm oil down to farm when European farmers are not required to do the same.

The plight of the palm oil farmer under the EU Commission's crushing regulations against them shows a mean protectionist streak in Ursula von Der Leyen in her “do as I say, not as I do” mentality. 

EU Matching on Nature and Biodiversity

A mirror clause on nature and biodiversity would challenge Ursula von Der Leyen and the EU Commission to look in the mirror for nature and biodiversity in the EU.  

European wolves and bears under threat from agicultural activities would join the orangutans in Indonesia and Malaysia where their absolute protection can be matched by the EU through the Nature Restoration Law.
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In fact, the IUCN has challenged the EU to meet its 30x30 ambitions.

Political will, financial resources, local and regional stakeholder involvement and policy coherence at various government levels, and across all sectors, are critical enabling factors for successful wetland restoration.

If Indonesia and Malaysia as vocal opponents of the EU’s green demands in trade were to support a mirror clause in trade based on legal protection for nature and biodiversity, these Southeast Asian countries would in essence be supporting the demands of European conservation groups like Birdlife who asked what the EU will do next, now that the Nature Restoration Law is in effect.

Fortunately for Ursula von Der Leyen and the European Commission, two new reports have been published that would enable them to “do as I do” if the EU has the political will.

Hungarian ecologists, part of the Hungarian Research Network (HUN-REN), contributed to a study revealing that European old-growth forests can sequester significantly more carbon dioxide than previously estimated.

If these forests were allowed to grow back in the wild, they could absorb up to 309 megatons of CO2 annually, potentially offsetting a substantial portion of Europe’s vehicular emissions.

Miguel Bastos Araújo, Spanish National Research Council and Diogo Alagador,Universidade de Évora further identified 117 million hectares, a quarter of the European continent, as prime opportunities for rewilding Europe.
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These opportunities for the EU to match its forest area to that of Indonesia and Malaysia would be a fair starting point for using mirror clauses in trade talks.

Published September 2024. CSPO Watch