EU-Mercosur Agreement on Sustainability

This is the fifth and final briefing in a series on the EU-Mercosur agreement, where BLOMSTEIN addresses key provisions with respect to Trade in Goods, Trade in Services, Public Procurement, Competition and Sustainability, and outlines implications and opportunities for businesses.

This edition highlights the Trade and Sustainable Development (TSD) chapter of the Agreement, which aims to integrate sustainable development into the Parties’ trade and investment relationship.

General framework

The TSD chapter outlines key principles and actions to advance sustainable development, with a particular focus on labour and environmental issues in the context of trade. The Parties acknowledge the need to account for differing national circumstances, including geographic conditions, capacities, needs, and levels of development, and commit to cooperation as a means of achieving shared objectives.

Each Party retains the right to define its own policies and priorities within its domestic legal framework, provided these remain consistent with its international obligations. The Parties pledge to continuously strengthen these frameworks and, more importantly, not to lower existing levels of protection – whether by waiving obligations or failing to enforce laws effectively – with the intention of encouraging trade or investment.

As part of these efforts, the Parties recognize the importance of responsible supply chain management in achieving sustainable development goals. In this context, they commit to promoting corporate social responsibility and to advancing joint initiatives and cooperation in this area.

Labour rights

The Parties reaffirm their commitment to fostering international trade that supports decent work for all, including women and young people. To this end, they pledge to effectively implement the core labour standards outlined in the fundamental ILO Conventions, covering freedom of association, the elimination of forced and child labour, and the principle of non-discrimination.

The chapter further requires the Parties to promote decent working conditions by strengthening occupational safety and health measures, enhancing labour inspections, and ensuring access to administrative and judicial remedies in cases of violations. In addition, the Parties commit to making continued and sustained efforts towards ratifying ILO instruments.

Environment

The parties reaffirm their commitment to promote and effectively implement the multilateral environmental agreements and protocols. Particular emphasis is placed on areas such as cli-mate change, biodiversity, the sustainable management of forests and marine resources.

Climate change

With regard to climate change, each party’s continued participation in the Paris Agreement – adopted under the UN Framework Convention on Climate Change (UNFCCC) – is a core requirement. Failure to remain a party to the Paris Agreement may lead to the suspension of the trade agreement. This provision reflects the EU’s broader strategy of integrating climate commitments into its trade policy.

The Parties also commit to the full and effective implementation of the Paris Agreement’s long-term objectives, guided by the principles of equity and common but differentiated responsibilities and respective capabilities, in light of national circumstances. This includes submitting and progressively strengthening nationally determined contributions (NDCs), aligning financial flows with climate goals, and developing robust climate adaptation strategies. The Parties recognize the importance of enhanced international cooperation to support developing countries, particularly through climate finance, technology transfer, and capacity building.

Energy transition

The Parties commit to exploring the potential for interregional partnerships in energy transition projects, leveraging their complementary strengths in inputs, expertise, and technologies. Priority sectors for such collaborations include responsible mining, beneficiation, and processing of metals and minerals critical to the energy transition; key energy sources such as liquefied natural gas (LNG) and renewable energy; sustainable mobility and related value chains, including lithiumion batteries, battery recycling, recharging infrastructure, electromobility, and electric vehicle manufacturing; sustainable biofuels, including ethanol, biodiesel, Sustainable Aviation Fuel (SAF), and Renewable Fuels of Non-Biological Origin (RFNBOs), green hydrogen and its derivatives.

Monitoring and Dispute Settlement

The Agreement establishes a dedicated Sub-Committee on Sustainability to monitor and support the implementation of the chapter. While the chapter is not subject to the standard dispute settlement mechanism, it includes a tailored procedure for resolving disagreements. If a mutually satisfactory solution cannot be reached, the issue can be referred to a panel of inde-pendent experts appointed by the Sub-Committee. This cooperative approach is designed to foster convergence through dialogue and collaboration.

Key takeaways

The sustainability chapter of the EU-Mercosur Agreement emphasizes that trade between the two blocs must actively advance sustainable development goals. While recognizing differences in development levels and capacities, the Agreement firmly commits both Parties to proactively addressing these challenges and strengthening economic and political cooperation to achieve these objectives.

BLOMSTEIN will closely monitor further developments and keep you informed. If you have any questions on the topic, Roland Stein, Bruno Galvão, Carolina Vidal, Margarida Marques and the entire team is ready to assist you.