New rules implemented by the European Union (EU), which took force in June, are set to ban products originating from deforested areas starting December 2024. This has created an atmosphere of tension, especially with major exporters like Brazil. In 2022, Brazil supplied the EU with commodities valued at nearly $12 billion, spanning soybeans, soymeal, corn, and beef products.
Carlos Favaro, Brazil’s Agriculture Minister, criticised these EU regulations, describing them as “an affront” to the World Trade Organization’s (WTO) guidelines. According to Favaro, only a meagre 2% of Brazilian farmers have been found guilty of environmental violations. He emphasized that the majority of Brazilian farmers adhere to regulations and should be duly recognised for their efforts. Favaro also suggested that Brazil might pivot to strengthen trade ties with other nations or blocs, like BRICS, if the EU continues to disregard Brazil’s environmental preservation efforts.
This dispute emerges against the backdrop of negotiations aiming to finalise a comprehensive trade agreement between Mercosur, the South American trade bloc, and EU nations. Although negotiations were completed in 2019, the agreement remains stalled, largely due to concerns over Brazil’s dedication to climate action.
Paulo Sousa, the President of Cargill in Brazil, expressed that Amazonian nations should have called out Europe’s protectionist approach years earlier. “Our timing is gone”, Sousa remarked, stressing the need for prompt and effective diplomatic action.
Brazil’s soy and beef sectors are particularly worried about the EU’s capacity to accurately determine a product’s origin and whether it is from a deforested region. They also raised concerns about how nations will be classified according to “deforestation risk”.
In response to these concerns, the European Commission (EC) stated to Reuters that the rules will be applied to all trade partners uniformly, rejecting claims of biased protectionism. The EC confirmed the feasibility of traceability systems for determining deforestation as long as they offer the commodities’ production geolocation. Furthermore, even products from high-risk nations can still access the EU market, provided companies undergo the necessary due diligence to confirm their products are deforestation-free.
The EU’s rules on deforestation, aimed at environmental preservation, are seeing resistance from key trade partners. The outcome of these regulations on the global trade dynamics remains to be seen, with countries like Brazil evaluating alternative trade partnerships.