Can Europe make trade into a tool for fighting climate change?

The fires ravaging the Amazon are so large you can see them from space. But to the countries in which the rainforest lies, the crisis is a domestic problem. “The majority of the countries that integrate the Amazon [need a joint response] to guarantee our sovereignty and natural wealth,” said Brazilian President Jair Bolsonaro on Wednesday.

The European Union, however, sees the Amazon fires as a global problem that affects it too. And the bloc is using its influence to try and bring about an end to the blazes and to address climate change more broadly.

As the United States steps back its leadership on environmental issues, the EU is moving into the breach. It is testing new tactics to foment action – especially via the use of its massive trade clout.

“Most countries around the world want to sell their goods on the European market,” says Céline Charveriat, the executive director of the Institute for European Environmental Policy, “so the EU is able to exert considerable influence through its own policies and standards.”

Trade as leverage

French President Emmanuel Macron tried to do just that by putting the forest fires and climate change on the agenda at the Group of Seven summit in Biarritz, France. According to Brazil’s space agency, fires in Brazil increased by 85% in 2019 and are large enough to be visible from orbit, a development linked to illegal logging to open farmland. 

To send a clear message to Mr. Bolsonaro, a far-right climate-change skeptic with close ties to agribusiness, Mr. Macron threatened to block the Mercosur trade agreement between the European Union and South America’s common market. The deal took two decades to complete and still faces several hurdles to its ratification. (The EU is Brazil’s second largest trading partner and Brazil is the single biggest exporter of agricultural products to the EU worldwide.)

The pressure produced some results. Mr. Bolsonaro, who in the eyes of climate-change experts proved alarmingly blasé in the face of record fires, has now deployed the army to tackle the flames and banned land-clearing fires for 60 days. At a minimum, Mr. Macron’s surprise move succeeded in creating a well-warranted sense of urgency.

“Environment and trade are actually two sides of the same coin,” says Dennis Tänzler, director of international climate policy at Adelphi, a Berlin-based think tank focused on climate, environment, and development issues. “Sustainable use of resources is key and needs to be at the heart of such an important trade agreement.“

Peru and Colombia, which make up Mercosur along with Argentina and Brazil, have called a meeting on Sept. 6 to craft a long-term plan to stop deforestation.

“Bolsonaro is relatively fresh in office,” notes Fariborz Zelli, a political science lecturer at Lund University, Sweden. “It is important psychologically to show that certain things will not go down well. The ecological argument might not matter to him. He is a free trade guy. … If Mercosur gets canceled or questioned it hits him where it hurts. I can’t think of a better option in the short run.”

But the effort also captured the EU’s ongoing struggle to project a united front. Ireland, which shares France’s concerns over what Mercosur would mean for its farmers, was the only nation to back the Mercosur threat (though German Environment Minister Svenja Schulze also made a warning). To come into force, the free trade agreement still needs the green light of EU governments, the European parliament, and national legislatures on both sides of the Atlantic.

The summit closed with an offer to provide $20 million in emergency funding to deal with the Amazon fires and no further mention of Mercosur. But the funding is seen by many environmentalists as ineffectual given the scale of the crisis. Mr. Bolsonaro initially snubbed the offer, before setting conditions on it and calling it interference in the country’s internal affairs in line with a colonialist mindset. (U.S. President Donald Trump expressed support for Mr. Bolsonaro on Twitter, further undermining Europe’s criticism.)

“We need to address the root causes”

The Amazon fires that have been burning for the past two weeks are the most serious in recent years and could affect a region of 2.6 million square miles, extending to parts of Peru, Bolivia, and Paraguay. But experts have been warning about the devastating consequences of such fires for decades.

“Twenty million [dollars] pledged to the Amazon is not good enough,” says Dr. Zelli. “Withholding a trade deal per se is not good enough. We need to address the root causes.”

Major drivers of deforestation in Brazil are cattle ranching and soy farming. European consumers, says Dr. Zelli, could do more to pressure their governments to consider complementary measures – including clear labeling and certification of origin schemes for soy and beef products. There are some reasons for optimism. The environment is a core competence of the EU and success stories include protection of biodiversity and banning pesticides. Since Mr. Bolsonaro is uncooperative, solutions could be found with nongovernmental organizations, like-minded authorities in the region, and other local actors, particularly indigenous groups.

As the second-largest economy in the world, the EU has leverage. Indeed, the bloc has made environmental considerations a tenet in multilateral negotiations and its foreign aid budget. It has also emerged as a standard setter in key domains and is increasingly exploring ways to link environmental performance and economic rewards. The woes of the World Trade Organization have led to an uptick of mega national and bilateral deals. The EU, adds Dr. Zelli, has proven largely consistent in terms of including safeguards for the environment.

Ms. Charveriat of the IEEP notes that EU chemical and car emission regulations have now become international standards. The bloc has also declared that it will not conclude trade deals with countries that have failed to ratify the Paris agreement. This and the European parliament’s scrutiny around the implementation of the EU-Canada free trade agreement leads her to expect greater linking between trade policies and environmental performance in the future.

”That being said, it has decided to reopen trade negotiations with the United States, so it is still unclear what the new rhetoric will mean in reality,” she notes. “With the transfer of economic power towards emerging countries, Europe will also need to find common ground and forge alliances with key emerging economies if it wants to influence green policies and standards beyond its borders.

Another beacon of hope is the European Commission’s new president, Ursula von der Leyen, who has proposed an ambitious European Green Deal to reduce the continent’s emissions.

“There is a window of opportunity,” says Mr. Tänzler. “With the U.K. heading for Brexit, the remaining states have the chance to show renewed capacity to act. In the field of climate diplomacy, it is of utmost importance to do the homework in order to enter into convincing discussions with partners such as the United States and Brazil.”