Deforestation: Brazil wants the EU to see the risk as low – 06/15/2023 – Market

President Lula’s government (PT) wants to propose a device in the negotiations for the agreement between Mercosur and the European Union to protect the export of Brazilian products in view of the new environmental requirements of the European bloc.

The idea is to defend that Brazil be declared in the text of the agreement a country with low risk of deforestation. The argument is that about 80% of the Brazilian territory fits this criterion and, therefore, the country can have a faster clearance for exports.

With this, it would be possible to reduce a series of environmental requirements that are not yet clearly set by the European Union, and that concern the Brazilian government and exporters.

In April, the European Parliament, which approves the laws that will be applied by the 27 countries of the European Union, approved a norm that prohibits the sale in the continent of products linked to deforestation.

The European legislative action was criticized by Brazilian interlocutors and the other Mercosur countries, who consider it a new obstacle to the conclusion of a commercial treaty that has been in negotiation for almost 20 years. A member of the Brazilian government assesses that the new laws may have the effect of unilaterally annulling points already agreed between the two blocs.

If there was optimism among negotiators at the beginning of the year regarding the issue, the current climate is one of apprehension. It is already considered quite unlikely that the parties will announce any significant progress at the EU summit with CELAC (Community of Latin American and Caribbean States) in mid-July in Brussels.

The main concern among government officials is how these new environmental rules will be applied. For example, who will be responsible for the certificate to be required by the European bloc — and whether it would be a Brazilian or international agency.

Brazil’s strategy is to try to resolve these issues in a broader negotiation, via the Mercosur and European Union agreement. According to the plan outlined by Lula’s assistants, these negotiations would include ways to reduce requirements for domestic products or else establish deadlines and processes that do not hinder exports, mainly of agricultural products.

This Monday (12), during a joint declaration with the president of the European Commission, Ursula von der Leyen, Lula criticized the environmental requirements that the Europeans want in the agreement with Mercosur and said that the premise of the negotiations should not be one of “mistrust and sanction”.

“The European Union has approved its own laws with extraterritorial effects and that change the balance of the agreement. These initiatives represent potential restrictions on agricultural and industrial exports from Brazil,” Lula said at the time, referring to the April rule.

For Lula’s assistants, there is a lack of details and clear rules in the conditions demanded by Europe for the purchase of products.

Without this clarity of how the new laws will be applied, there is a high risk of preventing a large part of the export of Brazilian products to the bloc, evaluate Brazilian representatives who participate in the negotiations.

Therefore, the Brazilian government wants these terms to be regulated — that is, that the wording make explicit how environmental requirements will work in practice and that it bring mechanisms that protect the sale of products to the European bloc.

The designation of Brazil as a low risk country for deforestation would be an additional guarantee that there would be no barriers against Brazilian exports.

In the law passed by the European Parliament, it is not just about felled wood. Any crop that uses land where there has been illegal deforestation will suffer purchase sanctions by EU countries.

The language is considered worrying because it can cover, in practice, a series of Brazilian products — mainly those originating in the Amazon.

There is a list of primary products in the law: cattle, wood, soybeans, coffee, cocoa, rubber and oil palm. Any other product that is fed with one of them (meat from animals that eat feed produced with soy, for example) or derived from these commodities are also contemplated in the text, such as leather, chocolate, furniture, charcoal, printed paper products, derivatives of palm oil, among others.

No country or specific commodity is prohibited. However, companies will only be able to sell these goods in the EU after the supplier issues an audited document confirming that the product does not come from land deforested or led to forest degradation after December 31, 2020.

Mercosur and the European Union will hold a new negotiation round for the agreement between the blocs at the end of the month. The meeting is scheduled to take place in Argentina between the 28th and 30th of June.

On the occasion, according to Brazilian negotiators, the South American bloc intends to present a counterproposal to the so-called “side letter”, which is an additional commitment letter that makes environmental conditions mandatory.

This is one of the main impasses for the ratification of the agreement. While Europe wants to ensure that the export of commodities with environmental problems is seen as a violation, members of the Brazilian government consider the conditions too strict.

At the Monday meeting, Lula also criticized this issue.

“I explained to President Von der Leyen Brazil’s concerns with the additional instrument to the agreement presented by the European Union in March of this year, which expands the country’s obligations and makes them subject to sanctions in case of non-compliance. The premise that must exist between partners strategic goals is mutual trust and not distrust and sanctions”, said the president.

Lula has also been saying publicly that the mechanism referring to government purchases needs to be reviewed, which need to be reserved for small and medium-sized producers in the countries. Behind the scenes, members of the government claim that this is a genuine demand, but one that has recently gained momentum with the Europeans’ insistence on the additional environmental protocol.

The counterproposal to be presented at the end of the month, in the assessment of members of the Brazilian government, should point out passages that are considered excessive and may also suggest that, in order to comply with certain requirements, there would be a counterpart from the EU, such as financing environmental actions in the country.

The EU’s environmental package is not the only recent obstacle to the treaty’s conclusion.

On Tuesday (13), the National Assembly of France approved a resolution against ratification of the trade agreement – ​​in a vote without the power of law, but which politically signals the size of the rejection of the treaty in the French Parliament.