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The EU-MERCOSUR Deal: A Litmus Test for Resolving the Growing Paradox of Development and Conservation

“Ladies and gentlemen, in the search for prosperity, we are adopting policies that bring us closer to other countries which have developed themselves and consolidated their democracies. There can be no political freedom without there also being economic freedom. And vice-versa. The free market, concessions and privatization are already a reality in Brazil.”

– President Bolsonaro at opening of the 74th United Nations General Debate – New York, September 24, 2019.

During his United Nations (“UN”) Speech, Brazil President Bolsonaro made clear his government’s commitment to environmental protection and sustainable development to benefit Brazil and the world. He presented this position to the General Assembly in the form of a “solemn commitment.” But, the idea of a shared benefit—both to the world and Brazil—is a paradox developing and developed nations have struggled with concerning their global commitment to reduce overall carbon emissions because, as Bolsonaro implied during his remarks, overly restrictive environmental regulations could impair a nation’s economic growth and development. Bolsonaro pointed out that other countries had been allowed to manage their natural resources with little outside interference, even if there were adverse environmental consequences, and specifically referenced the history of developed nations like Germany and France.

Recently, Brazil was heavily criticized by world leaders regarding the Bolsonaro administration’s inaction to prevent or stop the burning of the Amazon rainforest—the highest surge in fires since 2010. These criticisms arose over a concern for conserving the Amazon’s carbon sequestration potential and its abundant biodiversity. Furthermore, the mass-burning of the Amazon rainforest is emitting incredible amounts of carbon, multiplying the effect of deforestation by contributing to the global emissions count.

As a country struggling with population growth and the need to develop into a ‘modern’ state, Brazil faces the same challenges as other developing nations: management of its natural resources and balancing this with economic and development goals. Brazil still hosts a disproportionate percentage of the world’s forests in the form of the Amazon river basin and still remains a underdeveloped nation. It is unlikely that the carbon sequestration potential of the nation’s forests will override Brazil’s commitment to development and economic growth without incentives to do otherwise. During the start of the century, Brazil had a poverty rate of 20% (World Bank estimate; UNICEF estimate is 32%), with rural poverty twice as high as urban poverty. A large percentage of its population still relies on subsistence or cash-crop based agriculture. Fueled by this reliance and the availability of the nation’s abundant resources, Brazil and President Bolsonaro must attempt to balance economics and conservation while facing a world-stage that seeks to meet a goal of no more than 2 degrees increase in global temperatures—something that continues to prove hard to achieve.

In an apparent attempt to balance these interests, Brazil has committed to a multilateral agreement related to environmental management through its membership in the Southern Common Market(MERCOSUR in its Spanish initials). The purpose of MERCOSUR is “to promote a common space that generates business and investment opportunities through the competitive integration of national economies into the international market.” On June 28, 2019, President Bolsonaro cooperated with the European Union (“EU”) and other MERCOSUR nations on the EU-Mercosur trade agreement. This foreign policy and trade agreement gives the EU some say in  Brazil’s stance on climate change and management of the Amazon basin. A possible motivation for Brazil’s participation is that, currently, the EU is Brazil’s second largest trading partner, holding about 18% of the South American nation’s total trade. According to the EU memo released on the agreement, the EU’s bilateral trade with the MERCOSUR nations currently totals €122 billion for total exchanges in goods and services.

The goal of the new EU-Mercosur trade deal is to: (1) “remove barriers and help EU firms to export more,” (2) “strengthen worker’s rights and ensure environment protection, encourage companies to act responsibly, and uphold high food safety standards,” and (3) “ protect quality EU food and drink products labelled as Geographic Indications from imitations.” The deal, notably, strives to create a forum to manage sustainable approaches to agriculture, development, and conservation. The EU claims “through this agreement, the EU and Mercosur are also committed to effectively implement[ing] the Paris Agreement on Climate Change.”

The EU-Mercosur trade agreement explicitly sets forward protections for the environment and commits all signatories to bilateral engagement regarding climate change. The text of the agreement outlines all parties’ commitment to promoting sustainable development. Most notably, the agreement demands that these decisions take into account signatories’ “different national realities, capacities, needs and levels of development  and respecting national policies and priorities.”

This being said, President Bolsonaro’s commitment to Brazil’s sovereignty begs the question of whether this agreement will work in the manner it is intended to. During his UN speech, President Bolsonaro made a point to mention “Our Amazon is larger than the entirety of Western Europe and remains practically untouched. Proof that we are one of the countries which best protect [sic] the environment.” He went on to challenge the G-7 nations for their “[daring] to apply sanctions,” explaining that “[i]t is a fallacy to say that the Amazon is the heritage of humanity and a misconception, as scientists say, to say our forest is the lungs of the world.” President Bolsonaro also attacked the media for their “sensationalist attacks” on his nation “due to the fires in the Amazon,” asserting to the General Assembly that these actions have “awoken [Brazil’s] patriotic feeling.” This sentiment towards developed nations and the world media demonstrate how the agreement still stands on unstable ground. Especially, if the Brazil’s economic and development goals are not balanced with the world’s desire to conserve the Amazon when implementing the agreement.

President Bolsonaro’s reaction, the rise of nationalism, and calls for respecting national sovereignty may signal a new era of international politics where the U.S. is no longer the ”world-policing force.” President Bolsonaro’s words challenge developed nations and multilateral organizations, like the UN and the EU, to recognize Brazil’s demands for sovereignty over its plans for economic development. At the same time, however, there is an acute need for the nations of the world to dramatically reduce carbon emissions, as well as come to an agreement on sustainable development and conservation of ecosystem services like carbon sequestration.

The June agreement between the EU and the MERCOSUR nations will test the efficacy of these multilateral trade agreements in their ability to mitigate such conflicting interests. If successful, it could highlight a way forward in managing the world’s carbon sequestration resources through trade and multilateral cooperation. With other nations like Indonesia also facing this paradox between economic growth and global commitments to reduce emissions, the success of the EU-Mercosur agreement becomes even more integral as a litmus test. If effective in its goal to use bilateral trade relations as a means to mitigate climate change, this agreement could become a sample of successful international policymaking. Whether the deal does indeed work, and work quickly, will only be known as the partnership attempts to achieve this agreement’s goals over the coming year.