Chethana Janith, Jadetimes Staff
C. Janith is a Jadetimes news reporter covering science and geopolitics.
In this article, I explain how the EU Anti-Deforestation Law impacts the Global South, particularly Brazilian exports to the European Union (EU) and the Mercosur-EU Free Trade Agreement. Brazilian ministers have protested, calling this law unilateral and punitive and denouncing its extraterritorial aspects.
What exactly is the EU Anti-Deforestation Law?
The EU Anti-Deforestation Law is a regulation approved on 6 December 2022, set to come into effect by the end of December this year. It can hinder EU trade with the Global South and the signing of the Mercosur-European Union Free Trade Agreement, which has been under discussion for over two decades. The law, which bans the import of products linked to deforestation, is part of the EU’s Green Deal (aiming for climate neutrality by 2050) and seeks to protect global forests by ensuring that products sold in the European market do not contribute to forest destruction.
The EU legislation targets seven commodities: cocoa, coffee, soy, palm oil, wood, rubber, and cattle (and their derivatives, such as meat and leather). These products will be subject to strict checks to ensure their production has not caused harm to forests.
Context of the Law
Historically, EU imports have been a significant driver of global deforestation. According to a KPMG Belgium study, between 1990 and 2008, around 36% of global deforestation linked to agricultural products and over 25% related to livestock production were attributed to EU imports. The law, according to the EU, is designed to tackle these impacts by regulating the European supply chain more sustainably and ensuring product traceability through technologies like satellite imagery and geolocation.
The aforementioned products and their derivatives (such as cosmetics, furniture, chocolate, etc.) will need to undergo a strict due diligence process and comply with new traceability requirements and environmental standards, in which companies must prove that their products were not produced in deforested areas after 31 December 2020.
This legislation affects products from countries such as Brazil (beef and soy), Argentina and Paraguay (soy and beef), Indonesia and Malaysia (palm oil), Peru (cocoa), West African countries (cocoa), Congo Basin countries (wood), among others.
Impact on Brazilian Exports
According to a study by the Brazilian Institute of Applied Economic Research (IPEA), the EU Anti-Deforestation Law (EUDR – European Union Deforestation Regulation) has significant implications for Brazilian exports, particularly in the soy and beef sectors, which are highly susceptible to the new environmental requirements. According to the study, the main effects include:
(i) Export restrictions: The law prohibits the import in the EU of products linked to deforestation or forest degradation after 31 December 2020. This directly affects beef and soy exports from areas deforested after this date. As Brazil is a major exporter to the EU, particularly of agricultural products like soy and beef, the new certification and traceability requirements could restrict these products’ access to the European market.
(ii) Compliance and certifications: A significant portion of Brazilian exports already adheres to voluntary sustainability standards, with certifications ensuring products are deforestation-free. However, critical regions such as the Cerrado (the Brazilian Savana) and the Amazon, which still face deforestation, may be impacted. For instance, around 7% of beef exports from the Amazon to the EU may be affected, while in Cerrado, this figure could be around 3%.
(iii) Compliance costs: The law imposes strict due diligence requirements, requiring exporters to provide information on product origins and ensure they are not linked to deforestation. This implies additional costs to ensure traceability and compliance with EU standards, which may affect the competitiveness of Brazilian products.
(iv) Market diversification: If exports to the EU are hindered, there is potential to redirect these products to other markets, such as China and Hong Kong, which are currently the largest importers of products from these regions.
Brazil Reacts to the EU Anti-Deforestation Law
Brazil has strongly opposed the EU Anti-Deforestation Law, calling for its suspension. The Brazilian government argues that the legislation is “punitive” and disregards Brazil’s national laws to combat deforestation. As one of the largest suppliers of targeted products such as beef, soy, wood, and coffee, Brazil fears the law will create additional trade barriers, significantly affecting its exports to the EU. The Brazilian government has also pointed out that the law increases production and export costs, especially for small producers.
Two Brazilian ministers have taken action, writing a letter to European authorities. In the letter, signed by Mauro Vieira, Minister of Foreign Affairs, and Carlos Henrique Baqueta Fávaro, Minister of Agriculture and Livestock, the ministers made the following requests:
Postpone the Implementation of the Anti-Deforestation Law (EUDR): Brazil requests that the EU delay the implementation of the law, scheduled for the end of 2024, and calls for an urgent reassessment of the legislation’s approach due to its potential negative impact on trade relations between Brazil and the EU.
Revise the Law’s Unilateral Approach: The ministers argue that the EUDR is a unilateral and punitive instrument that disregards Brazilian national laws on deforestation. They highlight that the law has extraterritorial aspects that conflict with the principle of sovereignty, in addition to increasing production and export costs, especially for small producers.
Seek Collaborative Solutions: The ministers expressed Brazil’s willingness to continue exploring ways to strengthen Brazil-EU cooperation on forest preservation, both bilaterally and in appropriate regional and international forums. They urged the EU to partner in addressing common challenges based on dialogue, cooperation, and mutual respect, avoiding the imposition of trade barriers.
German Chancellor Olaf Scholz Reinforces Brazil’s Position
Europeans are not united on this matter. German Chancellor Olaf Scholz has called for the EU Anti-Deforestation Law’s application to be postponed. He voiced this position during a conference in Berlin, stating that he had already presented his arguments to European Commission President Ursula von der Leyen. Scholz’s concern is that the legislation imposes impractical requirements and heavy bureaucratic burdens on German and European companies, who fear that the traceability and compliance requirements imposed by the new law will hinder trade and raise costs. Scholz is aware that one of the main causes of his government’s unpopularity is inflation, especially the rising cost of food.
The Chancellor believes the practical implementation of the law will be challenging, particularly due to the complexity of global supply chains. Proving that commodities and their derivatives were not produced on deforested land after December 2020 presents significant logistical and technological challenges, such as collecting geolocation data and satellite imagery. Furthermore, companies must invest in new control systems, which increases costs and bureaucracy to comply with the law.
Finally, the EU Anti-Deforestation Law (EUDR) imposes significant additional barriers to exports from the Global South to the EU and may complicate the implementation of the Mercosur-European Union Free Trade Agreement, which is in its final stages of negotiation and could be signed at the G20 summit in Rio de Janeiro on 18-19 November. There is still no clear definition of whether Brazil, the leading negotiator partner on behalf of the Southern Cone bloc, will sign the Mercosur-EUfree trade agreement under these circumstances.
