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Some more information on the EU-MERCOSUR FTA - Commission announces success of negotiations before the G20 in Osaka
Just before the G20 of Osaka, the EU Commission announced it initialled with Mercosur the free trade chapter of its Association Agreement with Mercosur. But the text released seems to be a joke. It is only a 17 pages document, an agreement in principle. The second paragraph states clearly that “It’s not a legal text.” . The real text will contain thousands of pages.
President Juncker presents the deal reached as a proof that the EU presents as a standing for a rules-based trade, what is quite cynical considering that this is a big work of deregulation in favour of corporate, agribusiness, investors and providers of financial services.
On the political side, this premature announcement is surely also an intent to reinforce and support president Macri who will face a presidential election in October and has drastically cut export duties on soyabeans, a measure that has favoured landowner but has increased the a gift to the richest the destroyed the Argentinian economy and more than doubled the public debt of the country.
It helps also Bolsonaro who is facing several scandals, among them the revelations on the judgement of Lula, and the capture of a diplomat of Bolsonaro’s delegation caught with 39 kilos of coke when travelling to Osaka.
- The EU mandate for Mercosur negotiations is old (1999) and old-fashioned. It was before the concerns about climate change, the concerns of the effects of free trade deals.
- Commission negotiated with opacity, MEPs did not receive texts for months, (and the civil society even more) and Commission did not take into account the alarm of 600 scientists on the effect of the possible agreement for the Amazonian region. Or the appeal of 340 not to initial, among other concerns due to the fact that a genocide against indigenous is taking place in Brasil. Or the 2 letter of 67 MEPs not to initial because the EP is not constituted, and the issue is serious.
- What we know about the agreement it is a classical Association Agreement, with 3 chapters. A political and a co-operation chapters, both initialled in Uruguay in June 2018. And the one on trade, initialled this Friday 28/06/2019, that is a comprehensive free trade agreement (Chapters on goods, services, public procurement, intellectual property, rules, sustainable development, ...)
There is no ISDS clause in this FTA, because investment was not a EU competence when the mandate was granted, but most probably both parts will convene to push for the Multilateral Investment Court (MIC) and decide to join it. Or Commission could ask for a new mandate on ISDS.
Who is benefiting:
Clearly the European car industry and transnationals that will be able to export while for the moment there is a 35% tax in order to protect the local production of car (even for local Volkswagen in Argentina, etc...); Also the producers of car parts, machinery, big Pharma, chemical industry, service providers, including financial services,
Winning are also the European or multinational providers of public procurement (not much chance of reciprocity, due to the asymmetry....). We don’t know to what extent Commission reached to include the local procurement or only the national ones, and what are the eventual exclusions.
On the MERCOSUR side the big winners are the big landlords and agrobusiness companies. Most of those families are responsible of land grabbing and assassination of indigenous people and small farmers.
There are new quotas for beef, ethanol, and free entrance of soya with no way for those countries to impose duties of the export on soyabeans, a measure that is very important in Argentine, because it is similar to royalties on oil.
Most of the production is done using pesticides and antibiotics that are forbidden in the EU. And the soya exported for animals is GMO.
All this is not forbidden by the precautionary principle for Commission, provide it is not beef with hormones, or GMOs to be consumed directly (not indirectly) by the European public.
Winning are also the European or multinational providers of public procurement (not much chance of reciprocity, due to the asymmetry....). We don’t know to what extent Commission reached to include the local procurement or only the national ones, and what are the eventual exclusions.
Who is losing ?
Democracy and environment are big losers of the EU-MERCOSUR considering that the EU negotiated normally and gave respectability to Bolsonaro who is extreme-right and is result of a coup against Dilma Rousseff/Lula Da Silva, who celebrates the military coup of of 1964, is against the rights of LGTBI, who wants to change national education to adapt it to the extreme-right view. His government is a disaster for environment and the indigenous people has it considers that it is necessary to integrate their territories of the Amazonian region to the national production. 600 scientists have written a letter to Commission alerting on the danger of the deal for the Amazonian region.
Democracy is also losing also because the deal has been negotiated without transparency. It’s more than 2 years now that Commission has not informed MEPs and civil societies of the offers it is presenting to Mercosur, contrary to the promises of Malström on transparency. That’s why 340 organisations have addressed Commission 67 MEPs have written a letter to Commission last month to ask it to refrain from closing any deal as there is no Parliament constituted.
The workers of Argentina and Brasil are losing because that have jobs because of some protection to the national industry. For Argentina and Brazil the industries will have an enormous decrease, and we will see an increase of dependence to commodities, mining products, exportation of fossil energy.
For Uruguay and Paraguay it seems impossible to industrialize in the future, considering the competition with European products.
The victims of the agreements are the family and co-operative farmers in both regions, as the priority is given to big agribusiness. In the Mercosur countries they are in competition for land with the landlords, and transnational companies that will need more land in order to export to the EU. They are working for the national and regional market instead, ensuring food sovereignty.
In the EU many farmers in particular meat productors, will have to compete on an unfair manner with the Mercosur corporate agrobusiness massivelly using antibiotics, pesticides, hormones. But also the crop growers, because of the unfair competence with an agriculture using massively pesticides forbidden in the EU, and the entrance of ethanol, and enormous amount of soyabeans for animal food.
The consequences on environment of the option for agribusiness are tremendous because of the deforestation that will follow, to answer the European demand for meat, ethanol, soya, .... Pressure for exploitation is meaning the disappearance of the Amazonian region in few years. The European agriculture will increase its dependance to soyabeans instead of going ecological producing in Europe the necessary animal food. With the standstill clause no way to impose duties on soyabeans in the future.
On energy, there will be an important increase in exploitation of fracking gas and oil to answer to the EU demand.
Huge consequences on environment and citizen’s right will follow the privatisation of water supply and other public services, the privatisation of biodiversity, etc...
The European consumers are losing, as there is a recognition of the precautionary principle in theory but most of the points related to it are taking part under the point “dialogue”. Dialogue on the incredible abuse of use of antibiotics in the Mercosur countries, on the 200 new pesticides approved by the Bolsonaro Gvt, on the 200 pesticides used in Argentine and forbidden elsewhere, 30 of them considered very dangerous by the WHO (UN)...
The experience shows us that the EU is applying a very narrow interpretation of the precautionary principle. The control done at the European borders are not serious, as we can already see with products imported under the CETA agreement.
Tax payers will lose because of the tax reductions on imports from both sides, but also due the liberalization of financial services will expand tax evasion and money laundering, as shown in the GUE/NGL document “Shady deals, how the EU Mercosur FTA helps illicit financial flows” (2018)
The ilusion of the Human right clause, or the Trade of sustainable development clause.
Much was said by Commission in previous opportunities (EU-Colombia/Peru agreement...) on the possibility to use the FTA to improve the Human Right situation. The Colombian example but also other case such as Honduras etc... show again that it is not real. Commission is not applying the Democratic clause at it should and promised.
The same thing occurs with the Trade and Sustaibable Development clause. Hunderd of organizations of Peru have asked commission to apply this clause in the case of Peru in the framework of this agreement, and the answer of Commission is very poor, is a shame.
What are the next steps ?:
Fortunately not only in Europe but also in the Mercosur countries there is a huge resistance raising against this very damaging old-fashioned agreement. There us a multiplication of pronouncement of Trade union confederations, farmers organizations, indigenous organizations, MEPs (including fimaker Pino Solanas...) etc....
In order to organize jointly it better, please find here an overview of the next steps of this EU-MERCOSUR agreement:
- After initialling comes the legal scrubbing that takes around 10 months (usually they use it to tune the agreement. In CETA 19% of the agreement changed during the legal scrubbing. In this case of EU-Mercosur it’s really the core part of the negotiation, the exchange of offers, that will be done during this “legal scrubbing” period).
- Then the new Commission will have to approve the text
- Then the Council will have to approve. As this is an association agreement, not a EU only agreement, any country could block it at this stage. (Remember how Wallonia could block CETA even if its president Paul Magnette decided differently finally...)
- Then comes the signature by both parts.
- Then comes the ratification by the European Parliament and the provisional application. Council can decide for a earlier provisional application, but normally it decides to begin the provisional application after the vote of the European parliament
- Then the agreement must be ratified by all the national parliaments of the EU. If one parliament with national competences (in Belgian there are 7 of them) votes against, the Government of this country has to inform the Commission and the whole agreement is falling.
- If all national parliaments have ratified, the EU can go to the definitive conclusion of the agreement, and the official entry into force.
Paul-Emile Dupret, Advisor GUE/NGL
