Economic Ambition vs. Environmental Commitment: How the EU-Mercosur Deal Undermines the Green Deal

Clara Fette and Ben Littwin are law students at the University of Münster and former exchange students at FGV Direito Rio.

Introduction

After more than twenty years of negotiations, the EU–Mercosur trade agreement was celebrated as a milestone, a long-awaited bridge between Europe and South America. It promises jobs, cheaper goods and stronger political ties. Yet behind the diplomatic smiles lies a deeper contradiction: while the EU presents itself as a global leader in climate protection, the deal risks fuelling exactly the environmental destruction it claims to combat.

At the very moment Brussels pledges to make Europe the first climate-neutral continent, it is preparing to open its markets to beef, soy and ethanol, products closely linked to deforestation and rising carbon emissions in the Amazon. The EU wants to have it both ways: green at home but focused on growth abroad.

This essay argues that by prioritizing economic expansion over environmental protection, the EU-Mercosur agreement undermines not only the European Green Deal but also the EU’s credibility as a global actor in sustainable governance. What was meant to be a symbol of cooperation may ultimately expose the limits of Europe’s green ambitions.

EU–Mercosur Agreement

The EU-Mercosur Agreement is a planned free trade agreement between the European Union and the Mercosur countries of Argentina, Brazil, Paraguay and Uruguay. Negotiations officially began in 1999 but stalled for nearly two decades due to political and environmental disagreements. A political breakthrough was announced in 2019 when negotiators declared that they had reached a basic agreement on the key points, although the text has not yet been ratified.

Mercosur, officially the Southern Common Market, consists of the four full members mentioned above. Venezuela joined in 2012 but has been suspended since 2016 due to political developments in the country. Several South American countries have associate member status, including Bolivia, Chile, Colombia, Ecuador, Guyana, Peru and Suriname. Associate members participate in economic cooperation but do not have voting rights. Bolivia occupies a special position, as it signed an accession protocol in 2015 and is considered an acceding member, although the process has not yet been completed. Mexico and New Zealand participate as observers.

Essentially, the agreement between the EU and Mercosur aims to reduce tariffs and liberalise trade between the two regions. It is intended to expand market access, increase the competitiveness of exporters and strengthen bilateral investment flows. The agreement also includes a chapter on sustainability, which sets out commitments on environmental protection, workers' rights and the Paris Agreement. The wording of this chapter is primarily declaratory, as it does not provide for binding sanctions or robust enforcement procedures. Implementation therefore depends largely on cooperation and political will.

The agreement has sparked considerable political controversy. Within Europe, criticism intensified during the period of accelerated deforestation in the Amazon region and severe forest fires under the Bolsonaro government. These developments raised doubts about whether the agreement's environmental provisions were sufficient. As a result, several EU Member States have expressed reservations or withheld their support for ratification.

To understand why these provisions are so controversial, one must first examine the extent to which they fit or do not fit with the European Union's overall environmental strategy.

The Green Deal as a normative framework 

The Green Deal, which was adopted in 2019, has a few specific requirements. It’s the European Union’s most ambitious attempt to change its economic strategy toward long-term ecological sustainability. Moreover, it connects the climate policy, environmental protection, industrial policy and trade governance into one framework for the future. It is essentially a wide-ranging transformation strategy to reshape the EU-economy into a competitive, resource-efficient and socially inclusive economy. Instead of one law, it is a broad policy framework that includes new regulations, investment programmes, funding mechanisms and legislative reforms spanning across many sectors.

First of they want to achieve climate neutrality by 2050 and reduce the emissions by 55% till 2030. Generally, they want to protect the biodiversity and prevent deforestation. Therefore, they established the deforestation-free supply chains in the EUDR 2023. This core stands for the necessity of a structural change across energy, agriculture, transport and global supply chains.

Furthermore, the Green Deal is supported by high financial commitments, including over 275€ billion in clean investments in the NextGenerationEU and REPowerEU. This also shows that sustainability has become a budgetary priority, against which the EU’s external actions need to be assessed.

This diplomatic approach is reinforced in the Commission’s Trade Policy Review (2021) which states that all future trade agreements must be consistent with the Paris Agreement, the Union’s biodiversity commitments, and the “do no harm” principle. In practice, this implies that non-compliance with the Paris Agreement should lend to specific consequences, but the Mercosur Agreement contains no binding enforcement mechanisms for these obligations. It represents the EU as a value-based actor whose trading is expected to respect climate justice and the sustainable development. The “green” trade policy requires some binding sustainability clauses, robust monitoring, enforceable environmental obligations as well as reporting mechanisms.

The following section will focus on the contradiction, when these high normative demands confront the political and economic realities of large-scale trade agreements. Especially in the EU-Mercosur agreement the geopolitical influence and the interest on the market access can misalign with the EU’s environmental commitments. So on the one hand the Green Deal clearly wants deforestation, while on the other hand the Mercosur Agreement is increasing the deforestation-exposed imports.

The Contradiction: Growth over Green?

Trade agreements aren’t just economic instruments. In the Green Deal framework, they function as tools of environmental and political governance. As already noted, a tension becomes visible: whereas the Green Deal sees trade as an environmental instrument, the Mercosur Agreement treats trade primarily as a driver of economic growth, which sets the two frameworks on a potentially divergent course.

Economic interest 

Especially the agreement’s legal architecture shows the dominance of the EU economic interests. The tariff elimination for the export of cars, machinery and pharmaceuticals is an enormous benefit for EU exporters. By contrast, Mercosur’s market access gains mainly concern beef, sugar, poultry and soy, therefore the sectors that are structurally linked with deforestation dynamics and environmentally intensive production models. The expansion of tariff-rate quotas, including the additional 99.000 tonnes of beef authorised for export to the EU, will almost inevitably increase land-use pressures in major Mercosur agricultural regions. This outcome demonstrates the underlying hierarchy, because the environmental protections are relegated to aspirational clauses. In effect, the agreement codifies a governance model in which economic expansion is legally safeguarded.

Environmental Risks

The environmental implications highlight a striking inconsistency within the EU’s regulatory framework. Expanded market access for beef and soy run counter to the Union’s deforestation-free supply-chain obligations under the 2023 EUDR. Among all agricultural commodities, beef represents the most significant driver of forest loss. Beyond its extensive land demands, cattle ranching functions in biomes like the Amazon and Cerrado as the main vector of landscape conversion. This role is structural rather accidental. A lot of the territories are used for the cultivation of soy and other feed crops destined for livestock production in Europe. With this background it becomes obvious that the agreement promotes commodity flows whose ecological externalities no longer proportionate to the emission distribution are. Therefore, the pattern of production is misaligned with the EU’s commitments and undermines the coherence of the Green Deal framework. In conclusion the EU cannot claim climate neutrality while expanding markets for deforestation-linked products.

Weakness of Sustainability Clauses 

A central weakness of the sustainability clauses lies in the legal construction. The commitments are formulated in soft, non-binding language. The agreement couches the environmental aspects in permissive verbs such as “endeavour”, “encourage” or “promote”, with what the sustainability gets reduced to a set of voluntary aspirations instead of enforceable legal duties. Moreover, the chapter is insulated from the binding dispute-settlement system, so it provides no provision for sanctions or suspensions of trade concessions. Regarding that, the chapter also doesn’t mention measurable targets, timeframes or robust monitoring duties for a legal accountability. By contrast, the market-access provisions include precise, fully enforceable obligations. The resulting legal asymmetry shows strong incentives for rhetorically incorporated environmental norms but legally still peripheral.

Geopolitical Drives 

All the political dynamics around the EU-Mercosur Agreement reveal which geopolitical incentives can influence or displace the normative constraints of EU environmental law. China gained a lot of leverage in Brazil in the past years, and the EU therefore was pushed to secure a solid market access quickly. Furthermore, the EU wants to reduce their economic dependence on China as well. COVID-19 and the Ukraine war led the EU to want to diversify its supply chains and ensure alternative markets for industrial exports. Divergent Member State preferences however show a problematic dynamic. Germany, Spain and Portugal view the agreement as an industrial and geopolitical asset, while countries such as France, Austria and Ireland express their concerns about the environmental protection. This fragmentation erodes the Union’s credibility and assertiveness. To put it even further it reveals that geopolitical exigencies can weaken the legal force of the EU’s actual commitments.

EU Credibility

Taken together, the mentioned complications embedded in the Agreement destabilise the EU’s self-image as a sustainable “Normative Power”. But not only the self-image got damaged, even the credibility as a global sustainability leader got undermined. This whole controversy could be seen and accused as a greenwashing trade policy. In addition to that, the erosion of credibility affects the EU’s external action, for example in the trust for negotiations in multilaterals arenas such as COP30. Especially for future events, the ability of negotiating green clauses got directly weakened. Countries from the Global South could even view the standards as “green conditionality” rather than an actual partnership.

Overall, the contradictions outlined indicate that this tension extend beyond political disagreement. Therefore, the next chapter turns to legal incompatibility with EU law.

Legal analysis

Is the EU-Mercosur Agreement legally contestable? The central legal challenge of the EU-Mercosur Agreement arises from the tension between its institutional structure and the requirements of EU law. In its most politically sensitive dimension, namely sustainability and environmental protection commitments, the agreement is to be supplemented by an additional joint instrument that officially serves only to interpret the text of the agreement. The problem, however, is that this instrument makes substantive statements that could go beyond mere clarification. At the same time, the agreement affects existing EU legal requirements, particularly the regulation on deforestation. This raises the question of whether the planned conclusion is compatible with the requirements of EU law and whether the Union is overstepping its institutional boundaries.

Classification of the Greenpeace legal opinion

The legal opinion commissioned by Greenpeace and prepared by European law experts Christina Eckes and Birgit Verheyen examine precisely these questions. The authors do not conclude that the agreement is necessarily illegal. However, they identify several legal risks that could significantly jeopardize its validity before the Court of Justice of the European Union.

The analysis focuses on the Joint Instrument. The European Union presents this document as a mere interpretative aid. However, in the opinion of the experts, it contains additional obligations on climate and forest protection that are not included in the original text of the agreement. This brings the instrument closer to a material amendment to the agreement. If this is the case, the national parliaments of the member states would have to be involved in the ratification process. Adoption exclusively at the European level could therefore violate the structure of competences under EU law and create a democratic deficit. The expert opinion also points to a possible conflict between the agreement and the European Union's existing environmental law. The regulation on deforestation-free sourcing contains strict requirements for the market participation of certain raw materials and demands that they be sourced without residues. The agreement and the Joint Instrument, on the other hand, work primarily with programmatic goals and do not contain any binding enforcement mechanisms.  According to the experts' assessment, this could undermine the legal coherence of the Union and lead to international obligations coming into conflict with binding secondary law. The agreement is therefore not necessarily illegal, but it is legally vulnerable on key points.

Legal outlook

The identified risks have a direct impact on the further legal and political process. As a mixed agreement, the EU-Mercosur Agreement cannot enter into force in areas falling within the competence of the Member States without their consent. The sustainability provisions in particular, and thus also the Joint Instrument, could therefore be blocked in isolation. This increases the likelihood of a delay in the entire ratification process. In addition, there is a possibility that member states or European institutions could file an action for annulment with the Court of Justice. Such an action could be based, for example, on the fact that the Joint Instrument constitutes an inadmissible amendment to the agreement or that the agreement conflicts with mandatory environmental standards under EU law. Companies or individuals do not have the right to bring such an action. Even if it enters into force, it remains unclear how binding the obligations formulated in the Joint Instrument would actually be. Since neither the agreement nor the instrument provide for effective sanction mechanisms, there is a risk that the Mercosur states would view the provisions merely as political declarations of intent. This would mean that the practical implementation of European climate and forest protection goals would only be secured to a limited extent. Overall, therefore, the agreement is not clearly unlawful. However, it does pose substantial risks in terms of democratic legitimacy, distribution of powers, and legal consistency in relation to existing EU law. Whether it can be upheld in court will depend largely on the assessment of the Court of Justice if a judicial review is carried out.

Conclusion

The EU–Mercosur agreement reveals a fundamental inconsistency in the European Union's foreign policy. On the one hand, the EU presents itself as a global leader in environmental and climate protection. On the other hand, it is pursuing a trade agreement that promotes the expansion of trade flows that are demonstrably linked to deforestation, rising emissions, and significant environmental risks. This tension is not only political in nature but also affects legal and institutional structures. The European Green Deal calls for binding sustainability standards, robust control mechanisms, and the consistent alignment of all policies with climate and environmental commitments, which the agreement doesn’t meet. Its sustainability clauses remain non-binding declarations of intent and do not provide effective means of preventing ecological damage.

Legal analysis confirms this structural weakness. The central role of a supplementary instrument, the content of which may go beyond a mere interpretation, the potential conflicts with the EU regulation on deforestation-free supply chains, and the unresolved issues regarding the distribution of competences within the Union make it clear that the agreement is highly contestable. Even if ratified, it remains questionable whether the intended commitments will be implemented, given the lack of effective sanction mechanisms and clear enforcement structures.

Overall, the central thesis of this essay is confirmed. The European Union cannot make a credible global contribution to ecological change if its trade policy favors practices that it simultaneously claims to combat. As long as economic interests take precedence over binding environmental regulation, the Green Deal will remain more of a political aspiration than an actual paradigm shift. So only by making the sustainability clauses binding and compatible with the EUDR, the EU could reconcile its trade and climate policies.