Brazilian agro faces protectionism from the EU and other countries

Outstanding products of Brazilian agribusiness, such as meat, orange juice and coffee, are among those that most face protectionism and barriers to export in the international market. And a new wave of restrictions may be on the way, after the European Union approved the controversial anti-deforestation law, which intends to impose unilateral criteria to say how other countries should protect their biomes.

The survey “Report on trade barriers identified by the Brazilian private sector”, prepared by the National Confederation of Industry (CNI) in partnership with 19 business entities, shows that, globally, embargoes involve alleged sanitary and phytosanitary issues, technical regulations, licensing and, more recently, social and sustainability criteria, such as those announced by the European Union.

To overcome these obstacles, it is not enough just to “be right”. The appellate body of the World Trade Organization (WTO) has been paralyzed for more than four years due to the US blockade of appointments of new judges, for disagreeing with some processes and procedures. On the other hand, the worsening of geopolitical disputes between Russia and China against the West destabilizes the flow of trade, demanding more and more diplomatic skills in bilateral negotiations, not only to open new markets but also to maintain already conquered spaces.

EU ignores global pork quality label

According to the map of barriers raised by the CNI, several restrictions openly violate WTO rules and do not fit into any category other than mere protectionism. One example is the ban on imports of Brazilian pork by the European Union. The last outbreak of foot-and-mouth disease, a kind of thermometer of good sanitary practices, was registered in Brazil in 2006. Santa Catarina has been recognized as a disease-free area without vaccination since 2007, while Paraná and Rio Grande do Sul have had this status since May 2021 Even so, the European authorities do not lift the embargo.

The bloc also does not recognize the Brazilian segregation system with regard to the use of the feed additive ractopamine in pig feed. Unlike other countries that do not accept the substance, such as China and Russia, but recognize segregated production and maintain purchases, Brussels prohibits shipments with the justification of avoiding any risk.

With regard to chicken, Indonesia, a country with a high demand for animal protein, has simply prohibited imports from Brazil for decades, even after being condemned in a trade dispute panel at the WTO. Nigeria, another big market, also vetoes the entry of chicken and Brazilian beef, and has been delaying any opening, despite having already been called upon by a WTO committee. Mexico even opened its market through quotas in 2013, but in 2020 it went back, dropping the volume of poultry imports from Brazil by 96%.

Protectionism is on the loose, says Abag

Over the last thirty years, Brazil has been one of the most active countries in bringing the World Trade Organization into action to resolve this type of controversy, and, therefore, it is one of the countries that lose the most from its paralysis. “Our greatest interest is for the WTO to operate again. Protectionism is looser, the game has become rougher”, evaluates Ingo Plöger, vice-president of the Brazilian Agribusiness Association (Abag).

In recent years, environmentalists have gained muscle in European parliaments and this has led the continent to focus on a broad decarbonization plan, called the Green Deal. “They took this Green Deal and started to internationalize it. The problem is that the plan may make sense for them, but when they go international, not all criteria are valid for other realities”, says Plöger.

Among the consequences would be the “total bet” on the electric car, since the areas that Europe could allocate to the production of biomass for ethanol and biodiesel will be committed to increasing the cultivation of organic products. As for agricultural pesticides, for 2050 the bloc’s goal is to reduce by half what is currently applied per cultivated hectare-year. “Only that we have three harvests, so it is clear that we are going to spend more. If they took the ton of production criterion, the story would be different”, he emphasizes.

Law of reciprocity: Brazil considers paying the EU in the same currency

The anti-deforestation law, approved by the European Parliament on the 13th, will still need to be endorsed by the parliaments of the member states before it comes into force, but it is already provoking a strong Brazilian reaction, at least in Congress, which is analyzing a bill of “ environmental reciprocity” with support from the private sector. “There are European producers who use illegal labor in the production of wine, olive oil and other products. So, in reciprocity, we can also request that they give us the certification for each bottle of wine”, says Plöger.

Even those who do not welcome this erosion of the foundations of global trade organization, such as Daniel Vargas, a professor at FGV Rio and a doctor of law from Harvard University, understands that Brazil has the right to pay in kind.

“If, on the one hand, they consider that we deforest and fail to comply with minimum environmental requirements, on the other hand, we know that their products that arrive here use an infinitely greater load of energy produced with coal than ours. And that, therefore, generate negative environmental impact”, he emphasizes. For Vargas, at a time of tension between East and West, in which European policy “prescribes valuing trade with friends and neighbors, it is paradoxical that this norm pushes Brazil more and more into the open arms of Asia”, he points out.

Meat, coffee, oranges: restrictions lack foundations

Global trade does not tolerate naivety and the hard game includes old partners such as Saudi Arabia. Fifty years ago, the country was Sadia’s first customer in the Middle East, and until recently it led the ranking of Brazilian poultry shipments. Since 2018, however, it has fallen to 5th place, after canceling licenses for 90% of slaughterhouses qualified for export.

As a backdrop, the Arab country’s declared goal of reaching 80% self-sufficiency by 2025. This includes pressuring Brazilian companies to open units in the Middle East, as happened with BRF, which has the Saudi sovereign wealth fund as a shareholder and inaugurated a factory in the city of Damman in June last year.

Among other embargoes on Brazilian agriculture pointed out in the survey by the CNI and private entities, the 10% tax on sugar sent to Argentina also stands out; 15% on orange juice that is not deep-frozen and 32% on processed coffee sent to China; prohibition of beef imports by South Korea, due to the supposed risk of mad cow disease, which has never been registered in Brazil; 30% duty on whole chicken and 100% on cuts and preparations shipped to India.

Interestingly, Japan favors the entry of non-authentic orange juice by applying a 25.5% import tax to concentrates with more than 10% of the fruit’s natural sucrose. This favors Brazilian competitors who resort to artificial industrial processes, not allowed by the Codex Alimentarius. Thailand, China and Vietnam require health certificate for importing leather wet blue do Brasil, in disagreement with the norms of the World Organization for Animal Health (OIE).

The European Union has been increasingly restricting the maximum limits of pesticide residues, even when within acceptable scientific parameters; the bloc also intends to require audits to prove that products are not associated with deforestation, in addition to the carbon adjustment mechanism at the border (CBAM), a unilateral measure that will tax alleged CO2 emissions embedded in imported products.

Adoption of regulatory and bureaucratic barriers grows

For the analysts interviewed by the People’s Gazettein recent years trade barriers have become more sophisticated and difficult to combat, as they involve technical issues, regulations and licenses created to make access to certain markets more difficult.

This is the case of countries that do not approve the importation of transgenic products whose technologies have not been tested in their territories, ignoring the validity of international tests, or require high cost certificates that make trade unfeasible. the calls due diligencesaudits in production chains to prove sustainability practices and a series of adaptations also increase operating costs.

“What we are witnessing is the rise of a new type of barrier, more sophisticated and complex, and for that very reason more sinuous and often diffuse and difficult to combat, which are these technical-bureaucratic barriers, abstract barriers of environmental criteria, without a specific clarity of what they mean, but with very clear objectives of limiting certain products to benefit the economy and industry of a certain country”, says Vargas, from FGV. In the long term, he adds, these countries will be putting lower quality and more expensive products on their consumers’ tables.

Even Brazilian cheese bread does not have a visa for Europe. Simply because the block does not accept presentation of certificates from two different regulatory agencies, that is, the Ministry of Agriculture and the Health Surveillance Agency. As Anvisa cannot attest to information regarding eggs and dairy products, an attribution of the ministry, cheese bread remains prohibited from shipping.

Quality of Brazilian chicken breaks down barriers

So many barriers and embargoes have not been enough to stop Brazilian agriculture. The case of the chicken is emblematic. The country exports to 150 countries and breaks successive records of shipments due to the recognized status of sanitary quality and competitive price, in addition to having been “helped” recently by cases of avian flu among the main competitors.

Despite the change of governments, the director of markets at the Brazilian Association of Animal Protein (ABPA), Luiz Rua, points out that there is close and continuous cooperation between the productive sector and the technical teams of the ministries in an effort to access new markets. “We are relentless in that sense. These markets could open today, tomorrow, or two or five years from now. But we never stopped looking for access, because we understand that the Brazilian product is of quality, healthy, accessible to the population and can help in the food security of the countries”, he says.

For Rua, Brazil works in such a way as not to harm importers’ poultry farming, but acts in complementarity, offering what is lacking in local production. “We tried to demonstrate that producing to meet just the need for one cut, for example, would be much more inefficient on the part of these countries. Our role is not to replace local production, which has its weight and importance in economies. We even offer raw materials so that these same local industries can process and deliver value domestically in their countries. It’s a bit like how we work and that’s why we are in 150 markets”, he underlines.

This moment demands harmony between the public and private sectors

The moment demands focus and pragmatism from the government, in the assessment of Ingo Plöger, from Abag. “On the environmental side, I think we have more advantages than disadvantages, and these advantages have to be operationalized. The government has to leave the dogmatic question a little and enter the practical part. And join forces in the business area, because we have this window of opportunity for Brazil to show itself as an agroindustrial power, in sustainable energy and with a very aligned production chain. We have a lot, but we can’t keep fighting among ourselves, we have to unite to fight outside”, he concludes.

If technicians from the private sector and from the ministries exist in order to conquer new markets, it is not possible to say the same of the first echelon of the government, judging by recent facts. Like the presence of the head of the MST João Pedro Stédile in Lula’s entourage in China, while his militancy promoted invasions of farms in Brazil, and the statements of the president of the Apex, Jorge Viana, who on the same trip “demoted” Brazilian agro, which preserves 282 million hectares of native vegetation, associating the sector with the deforestation of forests.