Dutch minister defends Mercosur deal from green critics

Dutch minister defends Mercosur deal from green critics

The Dutch trade minister has insisted that Europe’s deal with the South American customs bloc will support rather than undermine the EU’s drive for sustainable growth, hitting back at criticism from farming and environmental lobbies. Sigrid Kaag says EU’s new trade deal can raise environmental standards in South America

Sigrid Kaag, a Dutch liberal and former UN diplomat, told the Financial Times that an EU free trade deal struck last month with Argentina, Brazil, Paraguay and Uruguay (Mercosur), was an opportunity for Europe to export its high social and environmental standards to South American economies.

The EU-Mercosur deal, which was sealed on June 28 after two decades of negotiations, will slash tariffs on each side’s exports. Big prizes for the EU included reduced duties on industrial goods and wine, while South American producers will get preferential access to European beef, poultry and sugar markets.

Europe’s farm lobby claimed that the trade deal would introduce unfair competition with producers who did not abide by similar agricultural standards. Green politicians complained that it paid only “lip service” to international climate change goals.

But Ms Kaag insisted that the Mercosur deal could be an example of the “sustainable” free trade liberalism that the Netherlands has encouraged inside the EU.

Countering fears from environmental groups, she said the deal was equipped with strict monitoring mechanisms to ensure that EU producers were not unfairly undercut and European standards not flouted.

“You can be sure that compliance or adherence to our standards is a starting point,” said Ms Kaag, who was speaking hours before the Mercosur deal was completed. “The monitoring will be very important.

“I’m fully mindful of the fact that there are also advocacy groups or concerned citizens that feel that you’re in a different position once you have signed up to a deal, but that’s also ignoring all the benefits that a trade agreement will bring. It’s not a zero-sum game.”

The European Commission has stressed that the Mercosur agreement committed both sides to implementing the Paris climate accord, amid concerns about deforestation in Brazil. It also contained an oversight and dispute settlement system to ensure producers on both sides honoured their environmental promises.

EU negotiators have also pointed out that Mercosur food exports to Europe must respect EU sanitary standards.

Environmental groups want Brussels to use its lucrative market access as leverage to push regulatory improvements in other countries. Ms Kaag said the trade deal would open another channel for discussions with Mercosur.

“Without a deal, the conversation [about standards] is much harder,” she said

The Netherlands remains one of the EU’s staunchest defenders of free trade at a time when barriers were being erected by the US and China. But Ms Kaag said her government was not naive about the social and environmental challenges involved in trade deals following public outrage at EU negotiations with the US and Canada.

The Netherlands has also acted as a moderating voice in a European debate about revamping the EU’s industrial policy in the face of unfair competition from Chinese companies.

Whereas France and Germany have pushed for a muscular response that involves relaxing competition rules to encourage mergers, Ms Kaag said the Dutch were offering “alternative” and less protectionist solutions.

“We don’t like to politicise or weaken European competition policy,” she said.

Instead, the focus for the EU, she added, should be on promoting the quality of European businesses by supporting technological innovation through research and development.

“It’s not size that necessarily matters. We have a lot of companies in the Netherlands, for instance, that are world leaders, but they’re not necessarily huge. They are not your traditional champions, but they are champions based on their smart use of technology.

“Protectionist policies completely ignore the fact that we’re living in an economy that is based on global value chains. The protectionist reaction is a reflex but it’s not a solution.”

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