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Do trade agreements work in an unpredictable world?

Do trade agreements work in an unpredictable world?

Quite quickly national considerations are taking priority over collective agreements. Who would have thought the European Union would be challenged by Brexit? And who would have thought trade wars, such as the one between China and the US would re-emerge?

Following a period of growing interest in shaping the international trade landscape by Preferential Trade Agreements, the trend seems to be shifting in recent years. Quite quickly in many parts of the world, national considerations are taking priority over collective agreements, leading to the break-up of partnerships we thought were secure. Who would have thought the European Union would be challenged by Brexit? And who would have thought trade wars, such as the one between China and the US would re-emerge? In the context of decreasing global coherence, let’s take a look at the expected effectiveness of trade agreements for the benefit of the economy, but even more so for the benefit of sustainability.

The recently agreed EU-Mercosur Trade Agreement, for example, is ‘based on the premise that trade should not happen at the expense of the environment or labour conditions; it should, on the contrary, promote sustainable development’. In order to achieve this goal a designated chapter on sustainable development has been added to the agreement, full of good intentions, backed by references to existing treaties such as the Paris Climate Change Agreement, ILO Labour Standards and UN agreements, such as CITES and the Ruggie Principles on Business and Human Rights. So on paper, the agreement sounds like it is a responsible and protective deal, with the aim to achieve a positive impact on the planet as a whole. However, people from several sectors involved in the deal are worried. And they sure have a point.

European consumer groups and agricultural associations have common concerns about food safety, responsible production processes and public health. They argue that European producers are held to a higher set of standards, leading to an uneven economic playing field. In addition, there are concerns related to food safety and health, and these are real, as was shown by the 2018 ban on Brazilian poultry in the EU due to the use of pesticides that are forbidden in Europe.

Both in Europe and in Latin America environmentalists are deeply worried about deforestation in Latin America, more in particular of the Brazilian Amazon rain forest, for the purpose of establishing agricultural land. This fear is not imaginary; in 2018 the Brazilian government itself reported a peak in deforestation, with a piece of land the size of 134 times Manhattan cleared in one year. Unfortunately, this record has already been broken, with a rise in land clearance of 88% since President Jair Bolsonaro took office. His disinterest and disdain for the environment is truly alarming, and has already led to warnings and reactions from several European countries. Human rights organisations do worry about these indigenous peoples losing their homes and livelihood, and they also strive to enhance labour conditions, including ways to ensure that the local population will benefit from any trade income due to the agreement.

So, given this context, what can we expect from the EU-Mercosur Agreement on Trade and Sustainable Development? Notwithstanding soothing statements about the strictness of the stipulations, the full commitment of the partners and the expectation that production land will boom at the cost of natural forest, the proof of the agreement will be in its enforcement. The agreement provides for a specific dispute settlement procedure, including formal government consultations and independent panels of experts that can publish reports and recommendations. But in a world where trade will trump sustainable development any time, where governments are unpredictable in their commitments and corporations want to expand, this may just not be enough.

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