{"id":60117496,"date":"2026-01-23T14:52:45","date_gmt":"2026-01-23T14:52:45","guid":{"rendered":"https:\/\/dialogue.earth\/?p=60117496"},"modified":"2026-01-28T09:09:21","modified_gmt":"2026-01-28T09:09:21","slug":"birth-of-biggest-ever-trade-bloc-troubles-environmental-experts","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/business\/birth-of-biggest-ever-trade-bloc-troubles-environmental-experts\/","title":{"rendered":"Birth of biggest ever trade bloc troubles environmental experts"},"content":{"rendered":"\n

The agreement to create the world\u2019s largest trading bloc could worsen environmental protections, experts warn. They point to a lack of clarity over environmental compliance and the incentivising of extractive projects or trade in \u201cemissions-intensive\u201d food products.<\/p>\n\n\n\n

Last week, the European Union and the bloc of five South American countries, Mercosur, finally penned<\/a> a trade agreement after more than two decades of negotiating.\u00a0<\/p>\n\n\n\n

The agreement still needs to be ratified by both the European Parliament and Mercosur member states, which experts estimate will happen by the second half of the year.<\/p>\n\n\n\n

However, on Wednesday the deal was referred<\/a> to the European court of justice to rule on its compatibility with EU treaties, which could delay it further. Once approved, it will gather countries with a combined population of more than 700 million into a single free-trade area. <\/p>\n\n\n\n

\"Brazil<\/div>
President Lula and Ursula von der Leyen, president of the European Commission in Bras\u00edlia, Brazil, one day before the signing of the deal (Image: T\u00e2nia R\u00eago \/ Ag\u00eancia Brasil) \u00a0<\/div><\/div><\/div><\/div>\n\n\n\n

Brazil\u2019s president Luiz In\u00e1cio Lula da Silva called it an \u201chistoric day for multilateralism\u201d. Other analysts and commentators hailed it as a boost for Europe\u2019s industries and geopolitical positioning.<\/p>\n\n\n\n

However, several environmental experts told Dialogue Earth the agreement is the result of unbalanced negotiations that will leave environments unprotected. <\/p>\n\n\n\n

\u201cThis is a harmful agreement that will undermine countries\u2019 efforts to address the climate emergency and pursue a just transition,\u201d says R\u00f4mulo Batista, who co-leads Greenpeace Brazil\u2019s forest solutions campaigns.<\/p>\n\n\n\n

Dialogue Earth also consulted Ignacio Bartesaghi, who directs the Institute of International Business at the Catholic University of Uruguay: \u201cThis agreement matters more for what it represents than for what it actually contains. It is a limited agreement, but it is the most significant thing that has happened to Mercosur since its creation.\u201d<\/p>\n\n\n\n

What does the agreement say?<\/h2>\n\n\n\n

The free-trade agreement has been 25 years in the making. The European Union began negotiating with Mercosur\u2019s bloc of five (Brazil, Argentina, Bolivia, Paraguay and Uruguay) in 1999. That process was finally completed with the signing<\/a> on 17 January in Asunci\u00f3n, Paraguay.<\/p>\n\n\n\n

The deal has been agreed amid rapidly changing geopolitics. Under President Trump, the US has been stepping back from international cooperation. Two weeks ago, his administration withdrew from 66 international agreements, including the UN climate change convention.<\/p>\n\n\n\n

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\u201cThe world is not the same as it was in 1999,\u201d says Magdalena Bas, associate professor of public international law at the University of the Republic of Uruguay (Udelar). \u201cThe EU is seeking to position itself as a defender of international law and a rules-based order, in contrast to Donald Trump\u2019s view that \u2018deals\u2019 should replace rules.\u201d <\/p>\n\n\n\n

This is especially important considering Trump\u2019s use of tariffs<\/a> as a negotiating tactic. \u201cThe European Union is looking to lower tariffs, establish common standards, and safeguard international trade,\u201d Bas adds.<\/p>\n\n\n\n

According to the European Commission, the deal<\/a> will lower tariffs on a range of goods, including cars, machinery and pharmaceuticals. It will also secure the EU\u2019s access to critical raw materials, including minerals needed in clean energy tech, and allow European firms to bid on South American public works contracts. Some estimates<\/a> put the economic growth the deal will bring to the EU and Mercosur by 2040 at 0.1% and 0.7% respectively. <\/p>\n\n\n\n

The European Commission projects the agreement will increase the EU\u2019s GDP by more than EUR 77.6 billion, and exports by up to EUR 50 billion. It says this will boost Europe\u2019s farmers, many of whom held last-ditch protests. The protestors argue the deal will in fact undermine domestic produce; France has consistently opposed<\/a> the deal, fearing its impact on local farmers. <\/p>\n\n\n\n

\"Protesters<\/div>
Farmers with a \u2018Stop EU-Mercosur\u2019 sign in Warsaw, Poland, protest against the agreement. Many European producers fear it will undermine domestic produce (Image: Attila Husejnow \/ ZUMA Press \/ Alamy)<\/div><\/div><\/div><\/div>\n\n\n\n

There is also a \u201crebalancing\u201d mechanism, enabling the EU to suspend parts of the deal if it feels Mercosur is not honouring environmental commitments; the Mercosur states have been granted less power to suspend trade in this way. For example, the EU may raise a dispute regarding deforestation, which has been touted as a potential boost for international environmental protection. Experts tell Dialogue Earth that such a boost is far from guaranteed.<\/p>\n\n\n\n

\u2018Ambiguous\u2019 environmental protections<\/h2>\n\n\n\n

Bartesaghi says any move towards universalising Europe\u2019s high environmental standards would be a step forward: \u201cThe European Union demands environmental clauses that do not exist in Mercosur. On trade and the environment, the EU is largely acting alone and pushing very high standards.\u201d<\/p>\n\n\n\n

The deal encourages the import into Latin America of highly polluting and health-damaging products<\/blockquote>R\u00f4mulo Batista, who co-leads Greenpeace Brazil\u2019s forest solutions campaigns<\/cite><\/div><\/div>\n\n\n\n

A 2024 study<\/a> by a group of Brazilian researchers concluded that, despite its limitations, the deal could be a \u201cuseful additional tool for improving sustainability governance\u201d in trade between the regions: \u201cThe [deal] could set a positive benchmark for future free trade agreements that Mercosur might negotiate with other countries that are larger importers of agricultural commodities.\u201d<\/p>\n\n\n\n

However, others point to the ambiguity surrounding environmental compliance in the deal. While the agreement allows for action in the case of a \u201cserious breach\u201d of environmental standards, it is not made clear what these standards are, or how things like deforestation should be measured. That is according to Igor Olech, an agriculture and food economics researcher at Poland\u2019s National Research Institute (IAFE-NRI) in Warsaw.<\/p>\n\n\n\n

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\u201cThat ambiguity is one of its main problems,\u201d says Olech, whose research<\/a> on the agreement was published last month. \u201cIt opens the door to endless legal disputes. If the European Union believes the Amazon is not adequately protected, it can claim a serious breach. Brazil will argue that it is not. The agreement does not clarify who would be right.\u201d<\/p>\n\n\n\n

Olech says this would benefit large producers, which are more able to afford certification, over smaller ones. He adds that it risks making producers \u201cjudges of their own compliance\u201d. <\/p>\n\n\n\n

There are also concerns that the liberalisation of trade could lead to an increase in deforestation or \u201cdirty\u201d extractive industries, like mining. Batista says: \u201cThe deal encourages the import into Latin America of highly polluting and health-damaging products, such as cars, plastics and pesticides from Europe, in exchange for commodities often sourced from deforested areas.\u201d<\/p>\n\n\n\n

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An analysis conducted by European law academics working at the University of Amsterdam, and published<\/a> by Climate Action Network (CAN) Europe, warns the agreement could \u201cfacilitate trade in some highly emission-intensive food products\u201d like beef or soy. This would contribute to global emissions. Audrey Changoe, a trade expert at CAN, says the rebalancing mechanism could become a \u201ctool to pressure EU countries into weakening green regulations\u201d, which should be regarded as a \u201cred line\u201d by lawmakers.<\/p>\n\n\n\n

The deal could also encourage a reliance on longer food supply chains, thus increasing the overall carbon footprints of goods \u2013 studies show transport accounts for nearly 20%<\/a> of food industry emissions.<\/p>\n\n\n\n

\u2018Neocolonialism in disguise\u2019<\/h2>\n\n\n\n

Some observers have expressed concern that the deal also entrenches postcolonial relationships between Europe and the Global South, while delivering little in the way of trade benefits. <\/p>\n\n\n\n

Changoe calls the deal \u201cneocolonialism in disguise\u201d, adding: \u201cHigher value EU goods are being exported to South America, intensifying deindustrialisation and job losses there, while condemning South America to the eternal role of exporter of low-value raw materials with massive ecological impacts to the EU.\u201d <\/p>\n\n\n\n

Laura Restrepo Alameda, an advocacy officer at CAN Latin America, says the deal risks \u201creinforcing an agribusiness model based on exports of large-scale monocultures, dangerous pesticides and the concentration of power\u201d in the hands of a few large companies. She points out that these companies are already pushing to roll back environmental protections. <\/p>\n\n\n\n

\"Aerial<\/div>
Soybean fields in Mato Grosso, Brazil. The Mercosur and EU deal risks reinforcing an agribusiness model based on exports of large-scale monocultures, dangerous pesticides and the concentration of power, critics say (Image: Michael Runkel \/ Alamy)<\/div><\/div><\/div><\/div>\n\n\n\n

Not all in South America are so critical. \u201cThe agreement will bring trade benefits for Mercosur countries but we must be prepared to take advantage of them,\u201d says Bas. \u201cCountries should consider the policies that will be required to reap the benefits of the agreement and neutralise any negative effects on trade.\u201d<\/p>\n\n\n\n

Brazil\u2019s environment minister, Marina Silva, has also defended the pact. In a ministry statement, she asserts that the negotiations have produced \u201ca balanced text\u201d aligned with \u201ccontemporary environmental, social and economic challenges\u201d. The statement also says the EU-Mercosur agreement is anchored in a confidence that Lula\u2019s government is pursuing a \u201cserious\u201d environmental agenda.<\/p>\n","protected":false},"excerpt":{"rendered":"

After 25 years, the EU and Mercosur have finalised a trade deal that some experts say could increase emissions and undermine green policies<\/p>\n","protected":false},"author":50000868,"featured_media":60117544,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[758,761],"tags":[513,50029817,600],"hashtags":[],"country":[50000021,50041559],"class_list":["post-60117496","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-climate","tag-carbon-emissions","tag-supply-chains","tag-trade","country-brazil","country-european-union"],"acf":[],"yoast_head":"\nBirth of biggest ever trade bloc troubles environmental experts | Dialogue Earth<\/title>\n<meta name=\"description\" content=\"After 25 years, the EU and Mercosur have finalised a trade deal that some experts say could increase emissions and undermine green policies\" 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