European Union chief Ursula von der Leyen is headed to Paraguay this weekend to formally sign the EU-Mercosur Partnership Agreement, amid ongoing protests by thousands of farmers across the bloc.

After a qualified majority of EU leaders gave the green light last week to the free-trade deal that was 25 years in the making, the European Commission president said it would “create more business opportunities” and “give [European] companies better access to critical raw materials.”

Once approved by the European Parliament and ratified by both the EU and Mercosur, the massive accord — often dubbed a “cows-for-cars” trade deal — will open up markets on both continents to almost all goods, including cars, machinery and chemicals from Europe. And from South America, agricultural products and raw materials, including rare earth metals that are fueling the energy transition in the form of batteries and electronics.

The European Commission, which negotiated the text, has previously said the deal will “promote shared values and sustainable development,” helping to fight climate change and protect the planet. But environmental analysts have pointed out that the reality is less than ideal.

“This agreement basically goes against the EU’s [climate] commitments,” Audrey Changoe, trade policy coordinator at Climate Action Network Europe, told DW, listing off concerns including accelerated deforestation, increased carbon emissions, trade in harmful pesticides and the erosion of biodiversity.

‘Cows-for-cars’ trade deal 

The EU-Mercosur deal aims to create one of the world’s largest free-trade areas between the European Union and Brazil, Paraguay, Argentina, Uruguay and eventually Bolivia, when it aligns its rules with the South American bloc. 

But Changoe said increased trade in agricultural products linked to deforestation in South America — especially beef, poultry, sugar and soy — would only further degrade the continent’s forests. 

Recent government data shows deforestation rates in Brazil — the largest Mercosur member — have dropped, hitting an 11-year low.  But the World Resources Institute, an independent research body, said Brazil still accounted for nearly half of the world’s tropical forest loss in 2024. This was due to agriculture, illegal logging, mining and wildfires.

Increased deforestation would primarily affect the Amazon rainforest, which plays a key role in regulating the global climate and weather patterns. Changoe said other vital ecosystems, like the Gran Chaco Forest, more than twice the size of California, and the Cerrado savanna, home to 5% of the world’s plants and animals, are also threatened by a potential boost in cattle ranching and soy production.

Along with the Amazon, these ecosystems act as huge carbon sinks and help absorb excess carbon emissions.

“The EU, globally, is one of the largest contributors to deforestation. So it does have a responsibility to ensure that it doesn’t perpetuate the deforestation drive abroad,” said Changoe.

In an effort to keep its environmental promises, the EU has pushed to include provisions in the deal obliging both sides to “effectively implement the Paris Climate Agreement” and undertake “concrete and measurable commitments to preserve the biodiversity of ecosystems and tackle deforestation.”

But Changoe said while the inclusion of the Paris Agreement in the deal is a “welcome addition” for trade agreements, it doesn’t go far enough. “The wording doesn’t add anything new to what’s already agreed under international agreements,” she said.

EU weakening green rules at home

The EU-Mercosur deal comes at a time when the EU has been diluting key policies of its landmark Green New Deal, introduced during a wave of support for the environmental transition in 2019. Amid pressure from the political right and industry over the last year, the EU has weakened or delayed environmental regulations in a bid to simplify climate policy and slash red tape for businesses. 

Patrizia Heidegger, deputy secretary general of the European Environmental Bureau, Europe’s largest network of environmental citizens’ organizations, said while the EU has successfully used the strength of its huge market to set global sustainability standards, the powerful influence of the EU-Mercosur deal could further weaken those regulations as European companies work to remain competitive with businesses in South America.

“At the moment, the political climate is one of a very strong anti-regulation narrative,” she said, highlighting the “erosion of environmental standards and safeguards” in areas like carbon pricing, emissions targets, deforestation and the phaseout of gas-powered vehicles. 

“And if we conclude trade agreements which expose our producers to competitors that don’t have to follow the same standards, our producers, our farmers will continue to push for lower standards.”

In the end, whether any of the sustainability and climate promises actually bear fruit will come down to enforcement, said the experts. 

“Are those measures actually enforceable, and are there meaningful sanctions?” said Heidegger. “That’s the usual problem with these trade agreements, that all these kind of sustainability clauses are usually not legally binding. It’s nice to have a paper, but then in practice, it does not mean that it will protect us from all these negative effects.”

Boost for bioeconomy?

Some analysts have said the influence of the EU’s sustainability measures could have a positive influence in South America, with the trade deal potentially supporting the development of circular economies in areas including forestry, mining and regenerative agriculture. Argentina and Uruguay, for example, have both developed bioeconomy strategies in response to the EU’s sustainability push.

The deal’s Trade and Sustainable Development chapter includes a brief mention of a goal that both the EU and Mercosur states “work together on the trade-related aspects of […] sustainable consumption and […] circular economy.” 

But a July 2022 report by the Institute for European Environmental Policy, a sustainability think tank, said efforts by the EU to regulate market access with “more stringent circular economy related standards” could hinder the expansion of such policies, creating higher barriers, especially for “small stakeholders in low and middle-income countries.”

The agreement text “does not contain any provisions to support the development of the circular economy,” said the IEEP of the deal in 2022 — and that hadn’t changed in last week’s final text. “Instead, [it] is left to a set of general principles based on the will of the parties,” the IEEP added.

Though the increased trans-Atlantic trade cooperation may inspire change for the better in Europe and South America, Heidegger said it shouldn’t stop both sides from working to further develop sustainability policies closer to home. 

“Whatever environmental standards you apply to the production, the fact that these things are shipped half around the planet already makes them very unsustainable,” she said. “I’m not saying that we shouldn’t be importing anything, but the focus should be on making sure that our own food production is sustainable, healthy, affordable […] rather than increasing our dependencies and ultimately continuing to depend on resources that we exploit elsewhere.”

Edited by: Tamsin Walker