Reply to questions A and B
The main driver of global deforestation and forest degradation is the expansion of agricultural land, which is linked to the production of commodities we import such as soy, beef, palm oil, wood, cocoa and coffee. As a major economy and consumer of these commodities linked to deforestation and forest degradation, the EU is partly responsible for this problem.
On 17 November 2021, the European Commission proposed a draft Regulation to minimise EU-driven deforestation and forest degradation, aimed at curbing deforestation and forest degradation driven by the expansion of agricultural land used to produce specific commodities, namely cattle, cocoa, coffee, palm oil, soya and wood, and some derived products, such as leather, chocolate and furniture, based on a thorough scientific and cost-benefit analysis of their impact on deforestation. By promoting the consumption of ‘deforestation-free' products and reducing the EU's impact on global deforestation and forest degradation, the new rules are expected to bring down greenhouse gas emissions and biodiversity loss. It is intended to minimise EU-driven deforestation and forest degradation.
For more details about the proposals, please also see: Proposal for a regulation on deforestation-free products (europa.eu)
The proposal is now under discussions within the European Parliament and the Council and might be amended before a final adoption.
The EU would like to flag that there is no import ban in this proposal: it’s a due diligence system. In that respect, we invite Brazil to refer to the impact assessment report accompanying the document Proposal for this draft Regulation which considered all the options, and on this basis the EU proposal chose the less distorting measure: a due diligence system with benchmarking system. This preferred option ensures that the EU puts in place the less trade distorting regulatory framework that is both ambitious and implementable.
Reply to Question C
The Regulation sets mandatory due diligence rules for operators which place specific commodities on the EU market that are associated with deforestation and forest degradation. For a summary of the proposal, please see New rules for deforestation-free products (europa.eu)
Operators will be required to collect the geographic coordinates of the land where the commodities they place on the market were produced. This strict traceability is meant to ensure that only deforestation-free products enter the EU market – and that enforcement authorities in Member States have the necessary means to control that this is the case.
A benchmarking system operated by the Commission will identify countries as presenting a low, standard or high risk of producing commodities or products that are not deforestation-free or in accordance with the legislation of the producer country. Obligations for operators and authorities will vary according to the level of risk of the country or region of production, with simplified due diligence duties for products coming from low-risk and enhanced scrutiny for high-risk areas.
The legislative proposal refers to customs declarations, as in case of any other product, and a due diligence statement. The due diligence statement is presented by EU operator to confirm that the due diligence by the EU operators has been performed, as required.
Reply to Question D
The EU proposal on deforestation is part of the global EU Green deal,[1] which contains several other initiatives. The July 2021 package[2] in support of the EU's climate targets is an integral part of our strategy to address climate change. As part of these efforts, the Carbon Border Adjustment Mechanism (CBAM)[3] is a climate measure that should prevent the risk of carbon leakage and support the EU's increased ambition on climate mitigation, while ensuring WTO compatibility. The CBAM will equalise the price of carbon between domestic products and imports and ensure that the EU's climate objectives are not undermined by production relocating to countries with less ambitious policies. The CBAM will initially apply to imports of the following goods: cement, iron and steel, aluminium, fertilisers, electricity. These sectors have a high risk of carbon leakage and high carbon emissions.
Reply to Question E
Article 4.2 of the AoA obliges WTO Members not to maintain, resort to, or revert to any measures of the kind which have been required to be converted into ordinary customs duties in the Uruguay Round. Footnote 1 of the AoA lists some examples of such measures but clarifies that they do not include measures maintained under balance-of-payments provisions or under other general, non-agriculture-specific provisions of GATT 1994 or of the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement.
Article XX of the GATT 1994 is one of the other general, non-agriculture specific provisions of GATT 1994. Thus, if a measure is justified by Article XX of the GATT 1994, Article 4.2 of the Agreement on Agriculture will not apply. This view is in accordance with relevant WTO case law, e.g. the Panel Report in Indonesia – Chicken (para. 7.68) as well as supported by the negotiating history of Article 4.2 of the Agreement on Agriculture
Article XX GATT covers in particular measures concerning the protection of human, animal, plant life or health (Article XX(b)), the protection of (living and non-living) exhaustible natural resources (Article XX(g)), and public morals (Article XX(a)). The EU’s measures implementing the Green Deal and the proposed Regulation on deforestation-free products will strictly comply with the respective requirements of these provisions.
In view of the above, having regard to the explicit recognition by WTO Members of the objective of sustainable development in the preamble of the WTO Agreement, there is no contradiction between the objective to achieve the Sustainable Development Goals (SDGs) through the implementation of the EU Green Deal and the proposed Regulation on deforestation-free products on the one hand and the spirit of reforming the AoA imbalances, especially in the Agricultural Market Access pillar, on the other.
See also, in that respect, the recent REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Application of EU health and environmental standards to imported agricultural and agri-food products, available at EUR-Lex - 52022DC0226 - EN - EUR-Lex (europa.eu)
[1] European Green Deal (europa.eu)
[2] EU economy and society to meet climate ambitions (europa.eu)
[3] Carbon Border Adjustment Mechanism (europa.eu)