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In 2019, the European Commission (EC) launched the European Green Deal, a sustainability strategy to transform the EU into a modern, competitive and climate-neutral economy by 2050. The European Climate Law makes this target legally binding.
The EU has shown sustainability leadership by adopting or proposing strategies, laws and directives on a range of sustainability topics, including the EU Emissions Trading System, the Biodiversity Strategy for 2030, the Nature Restoration Law, the Deforestation Regulation, the Circular Economy Action Plan, the Corporate Sustainability Reporting Directive, and the Corporate Sustainability Due Diligence Directive.
While such initiatives, laws and directives are usually the result of internal negotiations between the EC, the European Parliament and the Council of the EU, representing the member states’ governments, the EU is externally active in negotiating trade agreements with other countries or trade blocs.
A key test for the EU’s credibility as a world leader in sustainability is whether it can maintain and promote its political, social and environmental standards while negotiating with other global trading partners that might have different standards and priorities. The EU’s effectiveness as a global sustainability leader therefore depends on its ability to transfer some of its core sustainability values and internal norms into external trade agreements.
Two landmark free trade agreements – between the EU and the Mercosur countries and between the EU and India – have made headlines recently. Both reflect the EU’s efforts to diversify global strategic partnerships, reducing its dependencies on the US and China.
The EU-Mercosur Partnership Agreement, signed on 17 January, concludes more than 25 years of negotiations between the 27 EU member states and the South American trade bloc (Argentina, Brazil, Paraguay and Uruguay). It covers more than 700 million people, and is meant to create one of the largest free trade areas in the world. As part of the deal, more than 90% of import duties on bilateral trade will be removed.
The president of the EC, Ursula von der Leyen, described the agreement as: “A pledge to work towards climate neutrality by 2050. A clear contribution for trade to the green transition. A shared commitment to sustainable development and protection of labour rights.”
Only a few days after the official signing of the agreement, the European Parliament voted with a narrow majority to request a legal opinion from the European Court of Justice to assess whether the agreement conforms with the EU treaties. One central question is whether the deal restricts the EU’s ability to apply and enforce its environmental, occupational health and safety standards in the future, which could lead to lower levels of health, consumer and environmental protection in the EU.
Another question is whether the deal could offer Mercosur countries the option to seek compensation if stricter health and environmental laws were introduced in the EU, making it more difficult for them to export their goods. The vote in the European Parliament is likely to delay the final ratification until 2027 or even 2028. On 10 February, the European Parliament agreed on extra safeguards to prevent harm to Europe’s agriculture sector, making it possible to temporarily suspend tariff preferences if a surge in agricultural imports harms EU producers. After the ratification by Argentina, Uruguay and Brazil, the Commission is now proceeding with provisional application.
Critics of the agreement fear cheap imports from South America, especially beef, but the trade deal addresses this with quotas for sensitive farm products. NGOs warn that deforestation in the Amazon rainforest could accelerate, making it easier to sell more farm products such as soya, millet, sugar cane and raw materials and thus increasing pressure on natural resources.
Greenpeace speaks of “disastrous impacts on the Amazon, the climate and human rights” and Indigenous leaders, such as Alessandra Korap Munduruku, say that the expected higher production might lead to increased land grabbing and “will be done on our heads, on our bodies, at the expense of our rivers and the forest”.
Five EU member states voted against the agreement, among them France, following massive protests by French farmers in 2025 and 2026, fearing unfair competition, not being able to compete with South American imports produced at significantly lower costs, using pesticides and antibiotics that are banned in the EU.
Supporters such as the German government and the EC point out the strategic importance of this trade deal, with the potential to diversify trade, reduce reliance on China and balance the current dynamic tariffs from the US. They also highlight that the agreement will lower tariffs on critical raw materials and thus contribute to a secure and reliable supply of materials that are essential for the EU’s green and digital transitions, for example to produce EV batteries and develop clean technologies.
On 27 January, the EU concluded negotiations for another wide-reaching free trade agreement with India, which von der Leyen described as the “mother of all deals”, establishing a free trade zone of two billion people. The EU Commission estimates that tariff reductions will save EU exporters around €4bn per year in duties on European products, eliminating or reducing tariffs on 97% of EU goods exported to India. In return, duties on more than 99% of India’s EU exports will be removed or reduced.
The agreement is also important for the European car industry, with tariffs on cars planned to go down gradually from 110% to 10%. Agri-food tariffs will also be reduced, opening the rapidly growing Indian market to European farmers. Beef, chicken, rice and sugar are excluded from liberalisation in the agreement.
The EU will give €500m to support India’s efforts to reduce greenhouse gas emissions and promote its long-term sustainable industrial transformation.
The agreement still requires approval from the Council of the EU and the European Parliament, and ratification by India before it can enter into force.
Both free trade agreements have a dedicated chapter to link trade and sustainable development [TSD chapter] in which the parties commit to:
Enhancing environmental protection and addressing climate change (committing to the implementation of the Paris Agreement 2015, the conventions on biodiversity and trade of endangered species, forest conservation and combating illegal logging and wildlife trafficking).
- Protecting workers’ rights by respecting internationally recognised core labour standards as defined by the International Labour Organization.
- Not reducing environmental or labour protections to attract trade or investment
- Making sure that all imports comply with the EU’s strict health and food safety rules, including regulations on pesticides, animal and plant health.
- Including civil society organisations and Indigenous communities and involving them in monitoring the impact on society, economy and environment, as well as workers’ and human rights.
Although these agreements include dedicated chapters on sustainability, their actual impact on promoting a global sustainability agenda will depend on how effective the ‘soft’ enforcement mechanisms prove to be in practice. Both free trade agreements commit to resolving disputes and breaches through government dialogue and civil society consultations and through the use of expert panels and advisory groups rather than trade sanctions.
The vote in the European Parliament on the EU-Mercosur agreement has shown that there is a fine line between genuine sustainability concerns and a mere protectionist agenda. Any perceived attempt to compromise on social and environmental standards in favour of increasing trade is likely to meet opposition. Boosting exports could create new employment and prosperity but could also lead to increased CO2 emissions, exploitation and deforestation and could come at the expense of Indigenous and other vulnerable groups.
The role of civil society in South America, India and Europe will be crucial to monitor the implementation of these sustainability agreements, continually seeking dialogue with political decision-makers to help them find sustainable solutions that benefit the planet and balance the interests of all stakeholders.
Dr Thomas Burgdorff is co-chair of ISEP Europe
