EU seeks leadership with Green Pact, but could lead to

In a context where the climate crisis forces our societies to review production and consumption models, cooperation, pacts and international trade agreements play a decisive role in achieving the goals proposed by the IPCC (Intergovernmental Panel UN Climate Change Policy).

The report highlights, for example, that we must take immediate action to limit global warming to 1.5°C or 2°C to avoid environmental catastrophes.

The theme gains a certain level of complexity when thinking about how countries should adopt postures and standards to meet goals such as reducing carbon emissions, given the large economic asymmetries that exist, for example, between countries that make up Mercosur and the European Union ( HUH).

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This week, specialists gathered to debate the subject in a virtual table promoted by the Observatório de Regionalismos.

As highlighted by European exponents, the EU has pioneered environmental taxonomy for the regulation of sustainable finance and seeks to be a leader in environmental policies.

In large part, the bloc’s achievements are explained by the strength of the green parties and climate justice movements, which culminated in the so-called Green Pact, a proposal by the EU to become the first climate-neutral zone by 2050.

Its focus on agreements with other countries can therefore serve as a model, as argued by international relations expert José Antonio Sanahuja, director of the Carolina Foundation, in Madrid.

“In these connections between trade and sustainability, it is essential to establish a tax on carbon imports at the Union’s external borders. This is also an incentive for similar systems to be established in other countries or even on a global scale”, he emphasizes. “The possibility of this being the single most important element for achieving climate neutrality is already being considered,” says Sanahuja.

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According to the specialist in international relations, there is an incentive on the part of the bloc for the US and China to also join the mechanism, noting that the latter would be a country particularly affected by the rate of carbon emissions. China finances 70% of the world’s carbon plants, according to data from the National Green Finance Institute, released by Bloomberg.

This week, at the UN Assembly, Chinese President Xi Jinping announced that the country will suspend participation in investments in carbon plants abroad. World Resources Institute vice president for climate and economics, Helen Mountford, said the decision would be an important historical turning point in an interview with the AFP agency.

“China’s pledge shows that the hose of international public carbon finance is being erased,” he said.

In this sense, María Eva Carballera, official of the European Commission, the entity responsible for establishing the rules of trade agreements, emphasizes that trade agreements are opportunities to ensure, for example, that the goals of the Paris Agreement are met, even if the countries involved in the negotiation are not part of the Agreement.

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“Trade policy is an instrument to promote our climate action,” says Carballera, who heads the management unit for trade relations between the EU and Latin America.

“We have agreements with all countries in the region, except Bolivia and Venezuela. For us, it’s a great opportunity because it’s a very protected market, it always has been, and it’s also an opportunity for the region because the agreement is a possibility to reform their economies and introduce a platform to continue with our sustainable development policy.”

The other facet of the planet: trade agreements

The EU seeks to be a leader in climate agreements and, with its agreements, expand its influence in other regions, but the 20-year-old unresolved trade agreement with Mercosur comes into play as a contrast to climate-related policies.

Mariana Vázquez, professor of regional integration and international policy at the University of Buenos Aires and a former Mercosur official, pointed out that, even in the face of an unavoidable issue such as the climate crisis, the problem of asymmetries between regions should not be disregarded in order to face an agreement of that magnitude.

“While the geopolitical dimension and the multilateral trade system have been transformed in these 20 years, the asymmetries and structural difficulties in Latin America and the Caribbean have increased”, highlights Vázquez. “The political changes in Argentina, with the arrival of Mauricio Macri as president, and in Brazil, with Michel Temer and Jair Bolsonaro, explain the progress of the agreement with the EU in 2019.”

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For the professor, the agreement deepens the place of Latin American and Caribbean countries as raw material exporters, something she calls “primarization”. “There is a vicious feedback as the insourcing is linked with the increase of commercial ties with extra-regional partners, where the bloc exports primary products, mainly to China.”

According to ECLAC, in 2020 exports from the Latin American region were 70.8%, a figure that, as Vázquez points out, is the highest since the creation of Mercosur. This is explained by the accelerated recovery of China, the bloc’s biggest trading partner, during the first year of the covid-19 pandemic.

Environmental agreements as a new protectionism?

The former Mercosur employee is part, with the Global South Observatory, of a research team that has been poring over the many studies that have been carried out over these two decades on the agreement between the EU and Mercosur. The project evaluated 35 studies using different methodologies, including those commissioned by the European Commission itself.

“We are carrying out a specific impact study in the province of Buenos Aires, the most important in the country in terms of economic, industrialization, employment, etc. There is a consensus on what would be deepened with the agreement: rupture of regional chains, greater insourcing, loss of employment, greater productive and technological dependence, deterioration of dynamism and, as a result, greater external vulnerability”, he enumerates.

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“Without denying the relevance of the environmental crisis and the urgent need to seek a global cooperative response in this regard, the framework of green agreements would end up inscribing new norms that, sooner or later, will be incorporated into the multilateral legal framework, even if today it is not the case,” alerts Vázquez.

“This would lead to scenarios of greater protectionism, in this case green, greater market expulsion, technological dependence for peripheral countries. This can lead to the development of these geographies, in addition to economic growth itself, social inclusion, instability of democratic regimes”, he concludes.

In this regard, Sanahuja agrees. “The way we produce, market and the requirements in the EU are changing. The big debate and the challenge is: how to prevent this from becoming a factor of protectionism in a generation of technical norms that hinder trade.”

In the sense of global cooperation, the defense of democracy appears as a transversal aspect. “Extreme right-wing forces question what they call globalism, whether it’s Bolsonaro in Brazil, Vox in Spain or Orbán in Hungary.

The attack on globalism is an attack on multilateral norms that expand our horizons of progress in terms of gender equality, migration, environment, human rights. We share this problem, which concerns the health of our democracy and the challenge of climate change.”

Edition: Arturo Hartmann

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