As widely disclosed, Mercosur and EU have recently concluded the basis of the trade agreement between the two economic blocs. The principles of the agreement contain an entire section (Section 14) dedicated to sustainability principles.

In the chapter, the parties have officially agreed that trade between the countries shall not adversely impact the environment or working conditions, pointing out that trade should promote sustainable development. The countries agreed not to reduce labor and environmental protections as a result of the agreement, but assured the member countries of the EU and Mercosur that they will retain their sovereignty, especially in relation to the enactment of laws to protect health and the environment, including in cases of inconclusive scientific information.

The parties have also committed to observe and implement multilateral environmental treaties to which their countries are signatories, including the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and the Paris Agreement. The agreement also covers commitments to combat deforestation, the private sector not sourcing meat from farms in recently deforested areas, sustainable stewardship of forests, participation by traditional communities in promoting the sustainable supply chain of forestry products, and the combat against illegal logging and illegal, unregulated or undocumented fishing.

It also contains provisions on the promotion of corporate social responsibility rules under the OECD Guidelines for Multination Enterprises, the UN Guiding Principles on Business and Human Rights, as well as the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy.

In spite of the significant controversy surrounding the environmental policy of the new Brazilian government, the principles of the trade agreement appear to have revealed significant concern about the country sticking to its environmental policies.

In connection with environmental protection, the principles of the agreement also reinforce the provisions of multilateral treaties, such as the International Convention for the Protection of New Varieties of Plants, the International Plant Protection Convention and the standards of the World Organization for Animal Health.

One final remark is that the Trade and Sustainable Development section will be subject to a different conflict resolution procedure, involving, initially, the submission of any alleged violations to formal government consultation. Thereafter, if there is no solution, the matter may be referred to a panel of experts whose recommendations will be made public. The agreement also provides for possible participation by civil society in the process.

With the principles of the trade agreement defined, the representatives of the blocs will undertake a legal review and work on drafting a final version of the association agreement, which will be translated into all official languages of the EU and subsequently submitted for approval by member states of both blocs and the European Parliament.