[Author: Barbara Medrado]

In a statement before the G7 Summit, which was held on August 24-26, 2019, French President Emmanuel Macron vowed to block the recently negotiated trade deal between the European Union (“EU”) and Mercosur, the South American trade bloc formed by Argentina, Brazil, Paraguay, and Uruguay, unless Brazilian President Jair Bolsonaro takes action to deal with the fires now affecting substantial areas of the Amazon.

In June 2019, after nearly twenty years of negotiations, the EU and Mercosur agreed to a trade deal reducing tariffs on a wide variety of exports between the two trade blocs. Under the deal, the EU and the Mercosur countries agreed to maintain their commitments to implement the Paris Climate Agreement, which is designed to combat climate change.

Shortly after the EU and Mercosur agreed to the new trade deal, however, news spread that a series of wildfires had begun ravaging the Amazon rainforest in Brazil. It was reported that the fires had been set by ranchers and loggers who were clearing land in the Amazon for cattle and soybeans. Known for taking an aggressive approach to the development of the Amazon, President Bolsonaro has taken a number of controversial actions to facilitate development in the region, including firing the director of the Brazilian agency that monitors the Amazon last month after the director released numbers showing that deforestation of the Amazon had surged after Bolsonaro’s inauguration.

President Bolsonaro’s failure to adequately address the fires has become an issue for a number of countries in the EU. France, Ireland, and Slovakia have all indicated that they may block the EU-Mercosur deal unless President Bolsonaro takes steps to mitigate the damage to the Amazon rainforest from the fires. Moreover, when President Bolsonaro indicated that he planned to redistribute foreign aid tagged for Amazon protection projects, Germany and Norway froze tens of millions of dollars in assistance, placing additional pressure on the EU-Mercosur trade deal.

The EU remains torn over how to move forward on the issue. “We’re not going to attack the climate challenge by refusing to do trade,” stated European Trade Commissioner Cecilia Malmstrom. One EU official stated that it is possible the deal will be concluded by late 2020 but added that the “behavior of Brazil has a clear influence on the prospects for consent and ratification on the EU side.”