As the Deputy will be aware, negotiations for an EU-Mercosur Agreement were concluded in June 2019, marking the EU’s largest trade deal to date. The Agreement includes a Trade and Sustainable Development (TSD) chapter, which the European Commission has highlighted builds on the highest standards found in other modern Agreements – such as those with Mexico or Japan.
The TSD chapter promotes sustainable development as part of the trade relationship between the EU and Mercosur through commitments on environmental protection, climate change and labour rights. The basis of the TSD chapter is the premise that increased trade should not come at the expense of the environment or labour conditions.
Critically, the TSD chapter of the EU-Mercosur Agreement is subject to a specific dispute settlement procedure. Therefore, should the EU or Mercosur consider that the other party is not abiding by the rules, or honouring their commitments, formal government-level consultations can be requested. If the situation is not resolved, an independent panel of experts can be asked to examine the matter and prepare a report with recommendations. This report, including the recommendations, would be made public so that stakeholders and the relevant institutions on both sides can follow up on the relevant issues.
I should also point put that the EU Green Deal makes clear that trade policy can serve “as a platform to engage with trading partners on climate and environmental action”. In this regard, the EU-Mercosur Agreement includes a specific article on climate change, in which the EU and Mercosur agreed to strong language committing both parties to fully implement the provisions of the Paris Climate Agreement. The EU-Mercosur Agreement also includes commitments on fighting deforestation and the sustainable management of forests, as well as on responsible business conduct. It is, therefore, welcome that both the EU and Mercosur agree that strong environmental standards are vital to the success of the Agreement.
The EU Green Deal also underlines the Commission’s efforts to step up their implementation and enforcement of sustainability commitments in trade agreements and, as I have previously stated, enforceable guarantees, which strengthen environmental protections, particularly with regard to the Amazon rainforest and climate action, are a priority for me and this Government in terms of our assessment of the benefits from the Agreement. Furthermore, I believe these efforts will be significantly enhanced through the recent appointment of the first EU Chief Trade Enforcement Officer, within the Trade Directorate of the Commission.
Finally, in January 2020, my Department, in conjunction with the Department of Agriculture, Food and the Marine, commissioned an independent consultancy firm, to undertake an Economic and Sustainability Impact Assessment (ESIA) of the EU-Mercosur Agreement. In line with commitments in the Programme for Government, the ESIA is designed to assist Government in formulating its position on future ratification of the Agreement. In that context, the European Commission’s Sustainability Impact Assessment and other reports, such as that recently published by Oxford University, can form part of the overall analysis work that is being conducted with a view to informing the Government's approach when the formal legal texts of the Agreement are presented to the Member States by the Commission.