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Cañas: EU can’t afford to walk away from Mercosur trade agreement

Jordi Cañas (Renew). Credit: EP

In a wide-ranging interview with Borderlex’s Chris Horseman, MEP Jordi Cañas discusses the significance of the EU-Mercosur trade agreement and explains how he envisages the ratification process for this agreement.

Cañas is adamant that the geopolitical and strategic importance of such a major trade deal should not be underestimated.

“With the current challenges in global trade, and the tensions between the major powers, can we really afford to say no to partners that choose us before, say, China?” said the Spanish centrist MEP. The EU’s interests would not be served if the deal was treated as “a scapegoat to hide other pressing problems,” he said.

The increase in market access for Mercosur agricultural products should not imply a lowering a standards on the European market as long as the rules in place were properly enforced, according to Cañas.

The MEP noted that rather than fuelling the environmental problems of the Amazon region, the deal actually made ratification and implementation of the Paris Agreement a requisite for both parties.

But Cañas’s also called for vigilance on imports of agricultural goods. While claiming that the increased Mercosur quotas only amounted to “an increase of two steaks per European citizen,” the MEP also called for vigilance, and demanded that “any potential negative impact on our producers is met with a counter-measure to restore the balance.”

The full interview is below.

Borderlex: The European Commission finalised negotiations towards a new free trade agreement with the Mercosur bloc in the summer 2019. What stage has the INTA committee reached thus far in scrutinising the deal?

Jordi Cañas MEP: We are still waiting for the whole of the document to be published, so we can’t yet speak of a scrutiny process as such. The international trade committee’s work will begin early 2020 once the “legal scrubbing” is completed and we will have the certainty of what the final text says.

In the meantime, we will start our work in committee through ‘monitoring group’ meetings, where parliament will be debriefed regularly by Commission officials as well as other institutions and stakeholders – civil society organisations included.

As the standing rapporteur for this file I intend to hold these meetings at regular intervals and to ensure that all sides are listened to and a balanced debate takes place. It is in everyone’s interest that trade deals deliver benefits for all sides and that they are fair and require the same requisites for producers on both sides. It is in this area that we will be most vigilant – ensuring that reciprocity is the norm, and that any potential negative impact on our producers is met with a counter-measure to restore the balance.

BL: European farmers’ groups have been very critical of the concessions offered to agricultural exporters in the Mercosur countries – but there are also big gains for European exporters (of cheese, wine, spirits, olive oil, etc). Do you think the debate about agri-food terms of trade in the Mercosur agreement has been fairly balanced?

JC: There are a number of successes the EU can claim with this Agreement, and agriculture is one of them. Take geographical indications: some 370 denominations are protected in a market that is, traditionally, very much aligned to Europe in terms of traditional products due to our historical ties. Despite this, the EU has secured this protection for its own producers.

With regards to European farmers’ concerns, I think we have to be very careful to make sure that the agreement is strictly respected and that there is no market risk. If we take the example of the new beef TRQ, which is set at 99,000t – that number gives us an increase of two steaks per European citizen. I would then tend to not see this as an invasion or over-flooding of our market.

However, these are the numbers on paper. We now have to see how actual trade plays out under the new rules. And it is there that we will have to be most vigilant, and make sure that anti-distortion measures are triggered before there are damages to our producers and our wider economy.

I am convinced our farmers have genuine concerns, and we have to address them. This will be my main goal when we start the negotiations in the European Parliament – to have a balanced approach and get into every single aspect of the agreement that is a cause of concern. This is no small agreement, is it perhaps the most important one the EU will deliver during this mandate, and we must ensure it is based on full reciprocity for both sides, and clear commitments to face together the most pressing challenges.

BL: The European Commission insists that food standards have not changed, and that all Mercosur imports must continue to meet all relevant EU standards. Is this adequate reassurance for European consumers who may be concerned about the risk of sub-standard imports reaching the internal market?

JC: We are already trading with the Mercosur bloc, and whatever imports take place now, they will take place in the future. And the EU will insist on the same standards that it has imposed so far. It is made perfectly clear in the agreement that any imports that fail to respect these standards come with automatic suspensions for the infringing party, and also a ban on exporting in future. These are quite strict conditions, and the EU will never accept sub-standard imports of any agri-food products, we take this very seriously.

Of course, just because it is in the agreement it does not mean there is absolutely no risk. We have to be vigilant on what enters our internal market. And here is an opportunity for our own customs union to beef up its own capacity to detect and prevent imports that are illegal or a potential threat for our consumers.

European citrus producers have been very vocal about the risks of pests and the dangers they pose for European produce, especially in Spain. So it is clear that, first of all, we need the proper legal framework to prevent sub-standard produce from entering our markets, but these have to be coupled with the proper policy tools to effectively implement measures at our own borders.

BL: What would be an appropriate way for the EU to ensure that Brazil keeps its promises in terms of stemming the environmental impact of activity in the Amazon rainforest region?

JC: This is another problem this agreement faces, without any evidence to back it: that somehow the Amazon forest fires are linked to this trade agreement.

In this agreement the ratification and implementation of the Paris Agreement is a requisite for both parties. Public opinion must dissociate what happened this summer with the actual provisions of the agreement.

Brazil is the only G20 economy which is on track to deliver on its Paris Agreement goals, and we must acknowledge that. The EU-Mercosur FTA is based on the most ambitious climate commitments ever put into a trade agreement, and the consequences of Brazil leaving the Paris Agreement would be automatic suspension of the FTA. And in terms of the Amazon rainforest, it will take a combined effort, not just from Brazil, but from the whole international community, to protect it – it is a common goal.

But let’s also look at the numbers: the single biggest sources of pollution are human beings, and when we look at the size of the EU, in terms of size of territory and population, and at that of Brazil, or Argentina, I am quite sure we have quite a bit of hard work to do ourselves to meet our own climate objectives.

What we must do, precisely by means of this agreement, is help our partners in the areas where they most experience problems. We should not judge Brazil based on Bolsonaro, we have to be there for the Brazilian people, and offer our support where they need it most, particularly with regards to illegal deforestation and landgrabbing. Our Mercosur partners are very aware of our zero tolerance towards deforestation and unsustainable practices – what can we then do to help them work with us towards the same goal?

This is, in essence, the purpose of this agreement: forging strategic partnerships with countries that share our views. It is also a tremendous opportunity for Mercosur, as a bloc, to break away from “silos” and work towards sustainable development with one voice.

BL: The agreement has only limited impact in terms of liberalised access to the Mercosur services sector. This is an sector where the EU has great strengths – so do you see this as a missed opportunity for the European Union?

JC: On the contrary, Mercosur has been – and continues to be – one of the world’s most protected markets. One of the biggest advantages of this Agreement is the market access to maritime services for containers – approximately 80% of the intra-Mercosur maritime trade. This is new and a great gain for the EU.

Liberalisation for trade in services will translate into legal certainty for European providers and investors operating in the Mercosur countries, so economic growth in this sector, while difficult to quantify, is potentially significant.

BL: Economists have been virtually unanimous in declaring that the EU-Mercosur FTA will deliver significant economic benefits to both sides. Do you share this analysis – and will this put MEPs under greater pressure when they come to consider aspects of the deal which they might find less positive (e.g. in the area of the environment)?

JC: MEPs shouldn’t feel pressured because a trade agreement brings economic benefits, this is a given in all FTAs. What we need to do, as Parliament and representatives of the people, is look at the whole range of benefits of the trade deal and spot the areas that could become a potential risk for our producers or citizens.

Our citizens expect us to deliver policies that foster growth, but also respect and protect our environment. This is the whole point of the new “Green Deal”.

With the EU-Mercosur Agreement, my opinion is that it actually took the lead on what future FTAs should look like: binding international agreements on the fight against climate change, specifically mentioning the Paris Agreements and the obligation to implement it, labour standards, respect for human rights, addressing possible disturbances in the market by means of automatic suspension of imports. All of these binding and mandatory provisions have been accepted by Mercosur.

This is the first “bloc to bloc” deal that Mercosur has signed. It is a signal that they are ready to step up their own regional integration process and they look to us, to the EU, as their main strategic partner. They don’t just want to raise their standards of living, they want to live “with us”. They are just as ambitious as we are, and in the context of climate change, Europe can lead – but it cannot make any significant gain on its own.

This is why trade agreements, and our common commercial policy, is such a powerful tool: we want to export not just our products, but our values too. And Mercosur is composed of four stable democracies with that share our political traditions.

BL: Given the widely-voiced opposition to the EU-Mercosur deal, and given that the European Parliament has no power to amend the negotiated agreement – how confident are you that the deal will ultimately be approved by the INTA committee, or by the plenary?

JC: I can’t advance any prognosis and I certainly don’t have the numbers – we are just beginning our work here in the European Parliament.

We will have to do our best to listen, debate, identify errors and risks and act appropriately when the time to make a decision comes. It’s not going to be an easy task. But it certainly won’t help if, due to national interests that have nothing to do with climate concerns, we treat this deal as a scapegoat to hide other pressing problems.

But it’s important to understand that this is not a mere FTA, it goes beyond pure commerce and exchange of goods and services. We are associating at a political level, and we have a huge opportunity to work with another huge regional bloc on our global sustainable development goals.

We often talk, at an internal EU level, of the cost of “non-Europe” in a given area. We could also apply the same thinking to Mercosur, or Latin America in general. Can Europe really afford not to be present in what has been traditionally a market dominated by the United States?

With the current challenges in global trade, and the tensions between the major powers, can we really afford to say no to partners that choose us before, say, China? We have a chance to deliver on what we promise our citizens, especially on climate change. But we cannot do this alone.

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