How EU deforestation rules are hampering Mercosur trade deal

New EU legislation to ban the import of goods linked to deforestation has been complicating negotiations for a trade deal with South America’s Mercosur bloc, Brazilian officials said on Wednesday.

EU regulations, approved in April, require producers of soy, beef, coffee, wood and other commodities to provide proof their supply chain is free from deforestation.

“We must not allow this legislation to disrupt a trade agreement between Mercosur and the 27 countries of the European Union,” Brazil’s Vice President Geraldo Alckmin said at a conference organised by soy processors’ group Abiove. 

The group says that the soy sector complies with a moratorium on farming in deforested areas and Brazil already regulates deforestation under its forest code that allows some areas to be cleared. Abiove also states that farms in the Amazon have to conserve 80% of their forests.

Even though the obligation to comply with the rules will be up to the EU importers, Brazilian Foreign Trade Secretary Tatiana Prazeres said the commercial impact for exporters in increased costs and bureaucracy cannot be ignored in the trade talks.

“They really don’t like the deforestation directive but we are trying to reassure them that the implementation will take into account some of their concerns,” a European diplomat said.

Greenpeace: ‘Double standards’ in EU-Mercosur deal

The trade deal has already drawn criticism from environmental NGOs, such as FOUR PAWS. 

The NGO’s director of European policy, Joe Moran, previously told Euronews about his suspicion that scrapping a large amount of animal welfare regulation proposals last month may be “all about optics” for the EU, in the light of the European Commission’s efforts to secure the Mercosur trade deal as soon as possible before the European elections take place next year.

A new Greenpeace analysis has added to the chorus of voices criticising the deal, reporting that the trade agreement will cut tariffs on EU exports of throwaway plastic products.

“This deal is an outrageous example of the EU’s double standards,” said Greenpeace Germany trade campaigner Lis Cunha. “Some of the products promoted by the free trade deal, like single-use plastic cutlery, are banned within Europe because of their impacts on the environment and human health.” 

“Yet the EU is now ready to encourage international trade of the same products with Mercosur partner countries, in total disregard of people’s health and nature beyond the EU’s borders,” Cunha added.

What is the EU-Mercosur Trade Agreement about?

The European Union and Mercosur states – Argentina, Brazil Paraguay and Uruguay – reached a political agreement in 2019 to increase bilateral trade and investment, and demount barriers between EU countries and Mercosur markets.

The 27-country bloc is already Mercosur’s number one trade and investment partner, with exports to Mercosur reaching €45 billion in goods in 2021 and €17 billion in services in 2020.

The goal of the new EU-Mercosur trade deal is to lower tariff and non-tariff trade barriers and create common rules for trade and sustainable development, says the Commission on its website. 

The EU expects to see economic growth, more jobs, and increased activity in sustainable development on both sides.

However, the agreement has been on hold since 2019 largely due to European concerns over Amazon deforestation. Negotiations appeared to be more promising after the 2022 Brazilian presidential election victory of Luiz Inácio Lula da Silva, who reinstated old rules to protect the Amazon rainforest.

However difficult it proves to meet the EU’s rules on deforestation, both Brazilian Foreign Trade Secretary Tatiana Prazeres and the Foreign Ministry’s Economic and Finance Secretary Mauricio Lyrio said they expect to be able to announce the long-awaited conclusion to the trade negotiations with the EU at a Mercosur summit on 7 December. 

Lyrio said they asked for more time to implement the deforestation regulations at a meeting in Brussels last week. Companies have until 1 January 2025 to comply with the new law.

Earlier this year, European Commission President Ursula von der Leyen also expressed hope to finalise the deal by the end of the year at the latest.