Mercosur

Negotiations on a trade agreement between EFTA and the Mercosur countries (Argentina, Brazil, Paraguay, Uruguay) began in June 2017 and reached “in substance” a conclusion in August 2019 after ten rounds. The negotiation process was characterised by a lack of transparency, and only scant information is available on the outcome: the text of the agreement remains under lock and key to this day. Such a lack of transparency is not in keeping with the times and does not reflect the promises made by the Federal Council in its foreign economic policy strategy that states: “Switzerland maintains a foreign economic policy that is transparent and amenable to the concerns of interested parties. It systematically informs about new regulations and agreements.”

Seco cites discrepancies in the legal clarification of the text as the reason for not publishing the information to date. The fact that the EU is negotiating an FTA with Mercosur simultaneously is also causing delays. On the one hand, this much more important agreement has priority for Mercosur. And on the other hand, the EU Commission is trying to extract further concessions from the Mercosur states on the protection of the rainforests by renegotiating the agreement. Unlike EFTA, however, the EU has published the majority of the text of the agreement.

Aside from the notorious lack of transparency, Public Eye also criticises the absence of stakeholder involvement. Civil society groups in Switzerland and the Mercosur countries were not consulted, neither in the run-up to nor during the negotiation process – in stark contrast to the business community.

Sustainability? Non-existent!

From the limited amount of information available, we can only conclude that the FTA will lead to an expansion of trade in sensitive agricultural products, which is contrary to both sustainability and climate goals and is likely to further exacerbate the human rights situation.

Seco assures us that a robust sustainability section in the Mercosur Agreement will serve to prevent any negative repercussions for people and the environment. What the provisions on forest resource management, climate protection and organic farming actually contain, however, remains vague. Moreover, their adherence is neither systematically monitored, nor can misconduct be sanctioned or brought before the court of arbitration provided for in the agreement – in contrast to all other parts of the deal (see sustainability chapter).

Tariff incentives can serve to make production more sustainable. In the FTA with Indonesia, Switzerland has applied this mechanism, known as the PPM approach (Process and Production Method). But according to information from Seco, it is not envisaged in the FTA with Mercosur – a disappointing step backwards. Public Eye expects that tariff reductions for agricultural products also be consistently linked to sustainability criteria under the Mercosur agreement, to counter further deforestation of the Amazon.

Insensitive to human rights, dubious in the context of development policy

In the Mercosur countries – and especially in Brazil – the rights of indigenous peoples, but also of other marginalised groups (e.g., landless people, quilombolas) are systematically and massively violated. To prevent these human rights violations from being further exacerbated by the FTA, we need provisions that can be monitored and enforced – it is not enough to merely “refer” to the important international human rights instruments. This omission is incomprehensible in the context of the past legislative push to weaken indigenous rights in Brazil; the same applies to the notorious human and labour rights violations in the agricultural production of many goods for export.

A fundamental point of criticism relates to the agreement’s lack of orientation towards development policy. The fear is that the extensive dismantling of import duties for industrial products from EFTA will weaken the domestic industries in the Mercosur countries, cementing their role as suppliers of raw materials. Civil society organisations in the Mercosur countries are strongly critical of this “neo-colonial character” of the agreement. Public Eye has also long been warning against an imprudent reduction of tariffs on industrial products, as it would also remove urgently needed state revenue to finance education, health and other public expenditure. 

Civil society is fighting back

In Switzerland, a civil society coalition was formed in 2018, of which Public Eye is a member. Since then, the broad-based Mercosur coalition has been monitoring the FTA process and highlighting the weaknesses of the agreement at a political level, both with the administration and the public.

In a joint media release with the Uruguayan NGO REDES shortly after the start of negotiations, members of the ensuing coalition demanded transparent negotiations and consultation with those affected. The Mercosur coalition made further demands at its media conference in October 2018 and in a media release when the negotiations were concluded, including the requirement of prior sustainability assessments and the inclusion of binding sustainability criteria. Public Eye also critically examined the Mercosur agreement in a special issue of its magazine on the burning Amazon.

Leading the opposition of civil society organisations in the Mercosur countries are NGOs and social movements in Brazil, which is hardly surprising since it covers about 80% of the trade volume between EFTA and the Mercosur bloc. The Mercosur Coalition maintains a lively exchange with these organisations to support each other and join forces.