Economic vs. Environmental Protection: A Balancing Act

The SPD also sees the Mercosur agreement as being well placed in terms of nature conservation. But environmentalists are against it – and fear serious consequences for the environment.

Brussels – With the signing in Paraguay at the latest, it is clear: the EU leadership wants to put the Mercosur agreement into practice. The fact that Commission President Ursusla von der Leyen is pursuing this goal so stubbornly seems justified given the geopolitical situation. China is increasing the pressure on the EU with its massive trade surplus, and partners that were believed to be safe, such as the USA, are tending towards an aggressive economic policy under Donald Trump. Excessive tariffs do not make things easy for European companies, which can be observed in Germany especially in the automotive industry.

And yet there are major concerns about the Mercosur agreement. On the one hand, farmers are protesting against the import of South American agricultural products. They fear a drop in the price of their products, which the EU is trying to prevent with an import cap. On the other hand, there are fears that the EU and the Mercosur states Argentina, Brazil, Paraguay and Uruguay could lose sight of climate protection.

Concerns about the Mercosur agreement: SPD focuses on “sustainability and climate protection”

The SPD is a big supporter of the trade agreement. Its website states: “The agreement offers significant economic potential through mutual tariff reductions and market openings.” In response to a query from the Frankfurter Rundschau by Ippen.Media, Daniel Walter, representative for trade policy in the SPD parliamentary group, emphasized that it was “right and important given the current geopolitical situation” to find new trading partners. “The motto of isolation and aggressive trade policy, as applied by some actors, is not getting us anywhere.”

But despite the market economy’s urgency, there are concerns about climate policy. In an interview with the Frankfurter Rundschau, the Brazilian agricultural economist Antonio Andrioli warned that monocultures in South America, for example, require the use of pesticides that are not permitted at all in the EU.

However, the SPD counters this and asserts that environmental protection problems would definitely be taken into account in the agreement. “It is important that it is a partnership of equals that relies on common geopolitical and economic rules, sustainability and climate protection,” said Walter. His party has campaigned for years to ensure that climate and environmental concerns receive more attention in the agreement.

Paris climate agreement as a shield for environmental protection? Environmentalists criticize Mercosur agreement

As a safeguard, it was agreed in the Mercosur agreement that the Paris climate agreement would be used as a “key element” in the agreement. “As a result, the Mercosur agreement may be (partially) suspended if one of the parties withdraws from the climate protection agreement or undermines it from within,” said Walter.

The contracting parties also agreed to prevent further deforestation in South American countries and to increase the expansion of forest areas from 2030. “These points show that trade with the EU is not only free, but also offers a legal framework for enforcing bindingly agreed obligations,” says the SPD politician.

No matter how confident the Social Democrats are, environmentalists are not very convinced about the measures. “The classification of the Paris Climate Agreement as an “essential element” of the treaty is inadequate,” says Greenpeace forest protection expert Harald Gross when asked by our editorial team. The “weak wording” does not set any concrete measures for environmental protection, but only refers to remaining in the Paris Agreement.

“Weakens existing sustainability standards”: Greenpeace sharply criticizes the Mercosur agreement

Gross is also critical of the Social Democrats’ promises to protect the threatened rainforest in countries like Brazil. “The agreements on forest protection are very vague and hardly legally enforceable,” said the expert. Especially since measures to protect against deforestation should only take effect “from 2030”. This is a “contradiction to international agreements to stop deforestation by 2030”.

Gross believes that focusing only on the “pure forest area” is another mistake. This makes it possible to “replace valuable primary forests with industrial plantations, while other threatened ecosystems such as savannahs and wetlands are completely ignored.”

A study by the World Resources Institute (WRI) with the University of Maryland showed that an area of ​​6.7 million hectares of tropical rainforest was destroyed worldwide in 2024 – an absolute record. While fires are an ever-increasing threat to forests, “policies promoting agricultural expansion further exacerbated the problem,” the study says. The list of countries with the greatest loss of forest area is also headed by Brazil, a direct trading partner if the Mercosur agreement passes the EU Council.

Sustainability in the Mercosur agreement: SPD confident – ​​Greenpeace fears regression

Despite the concerns, the SPD is sticking to its sustainability promises. Also because the EU has committed itself to greater sustainability beyond the trade agreement. “Apart from the commitments in the trade agreement, since 2019 the EU has also developed unilateral instruments to make its trade more sustainable, such as the ban on forced labor, the carbon border adjustment mechanism and the deforestation regulation,” said Walter.

Greenpeace, however, fears the exact opposite. “The EU Deforestation Regulation (EUDR) should have come into force two years ago, but since then it has been continually delayed and weakened. The Mercosur agreement actually contradicts the goal of stopping deforestation, as it promotes trade in products that damage the climate and forests and undermines existing sustainability standards. The EU Deforestation Regulation is weakened by the mandatory recognition of Mercosur certificates,” criticizes Gross.

He also warns against the compensation mechanism provided for in the agreement, which could act as a “legal weapon”: threatened compensation claims could have a so-called “chilling effect” on new environmental laws. This means that such mechanisms could serve as an excuse not to implement further environmental measures.

Gross is also skeptical when it comes to human rights. In his opinion, the protection of the indigenous population is in danger of falling behind international standards. In addition, there were no “effective sanctions” against forced labor.

Despite environmental concerns: Is there no alternative to the Mercosur agreement?

It is a geopolitical dilemma that the EU finds itself in. And despite a likely majority in favor of the Mercosur agreement, countries like France, where there have been violent farmers’ protests, are not convinced by the idea. But is there an alternative at all if the USA withdraws further and further from its partnership with the EU and dependence on China becomes more and more likely?

According to a study by the Munich Ifo Institute on behalf of the “New Social Market Economy” initiative, an EU free trade offensive could “not only compensate for the burdens of US tariffs, for example, but even exceed them through additional positive effects”. The investigation related to possible agreements with the so-called P7, i.e. the Mercosur states, India, Malaysia, Indonesia, Thailand, Australia and the United Arab Emirates. It remains to be seen whether the Mercosur agreement alone can offset the trade losses. (Sources: SPD, Greenpeace, Ifo Institute, World Resources Institute) (pediatric)