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Assessment of the impact of the EU/Mercosur agreement remains incomplete

Mathilde Dupré, 8 August 2020

[English] [français]

A draft final report of the Sustainability Impact Assessment of the EU-Mercosur Trade Agreement was published in early July. After analysing this report, the Veblen Institute, ClientEarth, Conservation International and Fern provided LSE Consulting and the European Commission with a contribution on the shortcomings of this draft final report. While some sections have been strengthened, the content of this impact assessment remains incomplete on key points of the agreement and is based on data that does not reflect the latest trends in deforestation, for example, or human rights violations.

Our main recommendations :
  • Recommendations should take into account the fact that the negotiations have been concluded a year ago and should therefore address how the Commission could integrate the SIA findings at this stage of the process.
  • Recommendations should go beyond action at country level and explore how the association agreement should be used as an incentive to implement them.
  • The SIA conclusions and recommendations should be based on the latest available data, and take into account the most recent trends, where documented..

As highlighted in the Trade for All Communication, "Sustainability Impact Assessments (SIAs) are key instruments in formulating sound, transparent and evidence-based trade policies". The purpose of an SIA
is to inform trade negotiators and other stakeholders on the potential economic, social and environmental impacts of a proposed trade agreement, while it is being negotiated.
In the case of the Association Agreement between the EU and Mercosur, negotiations were closed on 28 June 2019, so the timing of the present draft final report raises questions about the extent to which the (ongoing) SIA process has actually fed into the work of the negotiators. This is particularly the case for
the policy recommendations and accompanying measures, which were only included in the final draft report published in July 2020. All deadlines initially announced have been far exceeded. Such delays have contributed to the SIA deviating further from various requirements under the Terms of references and the Handbook for trade SIA. This is why the Veblen Institute, the Nicolas Hulot Foundation, Client Earth, Fern and the International Federation for Human Rights filed a complaint with the EU Ombudsman on 15 June 2020.

Furthermore, the modelling of the draft interim report is still based on two scenarios: conservative and ambitious. Given that the final terms of the trade agreement have been known for more than a year, the SIA should take these terms into account to properly reflect their impacts on sustainability, and thereby contribute to the public debate around the conclusion and ratification process of the agreement. For example, recommendations like “The EU should consider the use of quotas and partial liberalisation to minimise the impact in sectors such as beef, poultry and sugar.” (p. 37) are now completely oudated and should be adapted to the current
situation, e.g. assessing the impacts of the quotas that have already been defined.

And finally, recommendations should go beyond action at country level and explore how the association agreement should be used as an incentive to effectively implement them. For example, the initial SIA of 2009 mentioned the option to introduce the compliance with a set of sustainability criteria as a condition to reductions in tariffs, which no longer appears in the report.

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