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COA Meeting start date 15/03/2022
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Brazil would like to consult the European Union on its proposed regulation on ‘deforestation-free products’ ("Proposal for a Regulation of the European Parliament and of the Council on the making available on the Union market as well as export from the Union of certain commodities and products associated with deforestation and forest degradation and repealing Regulation (EU) No 995/2010"). 

Brazil understands that such regulation will ban imports into the EU of some agricultural products, according to criteria allegedly associated with deforestation and forest degradation. 

It is worth highlighting the background of the proposed regulation: 

In 2019, approximately 34% (20 GtCO2-eq) of global GHG emissions came from the energy sector, 24% (14 GtCO2-eq) from industry, 22% (13 GtCO2-eq) from agriculture, forestry and other land use (AFOLU), 15% (8.7 GtCO2-eq) from transport and 6% (3.3 GtCO2-eq) from buildings (IPPC). 

Additionally, in comparison with developing country Members, such as Brazil, the EU in average and its largest economies in particular have not only higher percentages of agricultural land as a percentage of land area, but also lower percentages of forest area as a percentage of land area (World Bank), owing to deforestation-led processes of development. 

 

 

 

Finally, it has been observed in Europe “(…) an increase in the harvested forest area (49 per cent) and an increase in biomass loss (69 per cent) over Europe for the period of 2016–2018 relative to 2011–2015, with large losses occurring on the Iberian Peninsula and in the Nordic and Baltic countries. Satellite imagery further reveals that the average patch size of harvested area increased by 34 per cent across Europe, with potential effects on biodiversity, soil erosion and water regulation” (https://www.nature.com/articles/s41586-020-2438-y). 

In the light of the above, Brazil poses the following questions:

a. Taking into account the data mentioned above related to agricultural land and forest area, could the EU explain the rationale of adopting import bans to curb deforestation and forest degradation instead of less trade-restrictive measures? 
b. Taking into account the data mentioned above related to the increase in harvested forest area in the EU, how does the EU plan to enforce an equivalent ban to domestically-traded products? 
c. Could the EU elaborate on how it intends to carry out its border control of imports that will be subject to the new legislation? Will the EU require the submission of an application or other documentation as a prior condition for importation? 
d. Considering the overarching goals included in the European Green Deal, why has the EU chosen to apply import bans focused on agricultural goods and land use policies (therefore, to discriminate against developing countries which rely on the agricultural sector to foster its development), vis-à-vis industrial goods and the use of “dirty” sources of energy in production processes? 
e. How does the EU justify such measures in the light of Article 4 of the AoA?
Answer
Answer Full Text

​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)

Follow-up comments

Ecuador indicated their concern regarding access to market considering that the regulation impacted products emanating from tropical areas. It noted that the extraterritorial effects were very specific to forests that did not exist in the European Union.

Canada highlighted that to make meaningful efforts against climate change, the government of Canada considered innovation as essential to improve agriculture and productivity while at the same time reducing agriculture's impacts on the environment. Regulations could play an important role in achieving a shared outcome such as lower emissions globally. However, actions and regulations that were taken to promote increased sustainability in supply chains needed to take into account all aspects of sustainability, (social, economic and environment) and not create unnecessary trade barriers. Regulations needed to be based on science, be predictable and consider the realities of producing, transforming and bringing products to markets to be applicable across all different jurisdictions and products. Only then could progress on meeting shared goals be achieved.

The United States shared the EU's objective of reducing deforestation and forest degradation but expressed a number of questions concerning the scope of the proposed legislation which had been submitted to the EU's Directorate General for the Environment in February 2022. The US underscored the importance of consultations with trading partners and continued public participation as these policies were developed. It noted that any proposed legislation would need to take into consideration existing policies and programmes to promote reforestation, educate and offer technical assistance to growers to sustainably enhance productivity on existing agricultural lands and eliminate the need and incentives for future deforestation.

Indonesia echoed the concerns of other Members regarding the EU's regulation on deforestation and shared the views of Brazil and the co-sponsors particularly in relation to Indonesia's agricultural products such as coffee and palm oil. It indicated that the deforestation-free products policy was a unilateral measure that was likely to be inconsistent with WTO rules, enhance protectionism rather than encourage other countries tackle climate change or attain food security. Indonesia requested for a holistic clarification on technical aspects such as the calculation methodology, reporting and verification. It highlighted that the countries had different forest specifications and agricultural products' characteristics. The sustainability of production and the livelihoods of smallholder farmers varied. Indonesia invited the EU to analyse these issues closely and clarify its position on them and invited other Members to oversee this EU policy, especially from developing countries' and LDCs perspective given the impacts of the new measure on them.

Brazil expressed support to the questions AG-IMS ID 100103 by Indonesia, AG-IMS ID 100130 by Thailand and AG-IMS ID 100041 by India. Brazil indicated that it had developed competitive, sustainable, and efficient tropical agriculture. Brazil added that even in the context triggered by the COVID-19 pandemic, its agriculture showed admirable performance and consistent sustainable growth notwithstanding the fact relevant international actors had been erroneously associating the growth of Brazilian agriculture to illegitimate practices. These attacks were accompanied by the adoption of restrictive measures on international agriculture trade which were targeting imports from Brazil. Brazil highlighted that the number of Members concerned by this showed that it was the reality of several other developing countries while noting their awareness about the growing concern of consumers and civil society regarding environmental issues, the urgency of climate action and the imperative of achieving the Sustainable Development Goals, especially SDG 2 "Zero Hunger and Sustainable Agriculture" and 13 "Action Against Global Climate Change". Brazil emphasized the need for more secure and sustainable production systems. Brazilian consumers and civil society shared the same concerns however, Brazil expressed the view that environmentalist arguments had been instrumentalized by protectionist commercialized interests. Some opinion makers and decision makers in relevant markets were unaware of the regulatory and technological advances in Brazilian agriculture. Brazil also indicated that there was a reductionist view which tried to restrain sustainable development to the environmental aspect and to further restrict these environmental aspects of sustainability exclusively to the issue of deforestation. Brazil expressed concerns also regarding disproportionate responsibility for high emissions of greenhouse gases attributed by the international press and public opinion to agriculture from the World not just from Brazil with a convenient omittance of the central role of transport systems, domestic heating and electricity obtained from fossil fuels. In many cases, questions about the sustainability of livestock farming for example were based on opinion articles or studies carried out in specific regions without accounting for the impact of techniques and local ecological context on the sustainability of production. Currently in Europe, proposals for mandatory mechanisms on due diligence were on the verge of being adopted and were imposed on companies with the burden of proving that their production and supply chains were not associated with the risks of deforestation of tropical forests. The intent was to scare away the private sector from collaborating with developing countries because of the extra cost they would incur. Behind the proposal that was increasing companies' responsibilities for environmental standards of their supply chains, there was a discriminatory focus which inconsistently redefined what constituted sustainability in food production systems. Brazil had long been aware that agriculture was one of the sectors that was most exposed to the impacts of climate change and therefore, the public and private sectors in Brazil had been developing partnerships towards increasing more sustainable practices that were resilient to climate change. Brazilian agriculture production was fully compatible with the preservation of the environment and was contributing to the improvement of various environmental indices and to the rational use of natural resources and based on innovation, technology, and inclusive policies. Besides, the legitimate concerns about climate change and the projection that the world population would reach 9.7 billion in 2050 was a scenario of growing demand for food, especially grains and proteins which was imposing an additional challenge for the sustainable development of food systems to increase production and ensure distribution with the least impact on the environment. Brazil therefore had invested in agricultural research and rural extension which delivered substantial increases in productivity so that more was produced using the same area without depleting the soil which Brazil referred to as sustainable intensification of production. Moreover, Brazil was adopting at increasing rate, more sustainable processes including crop livestock forest integration, no-till agriculture, use of planted forests, recovery of degraded pastures and treatment of animal wastes among others.

Colombia expressed concern about the fact that the deforestation policy showed extraterritorial protection for combatting the degradation of primary forest for the production and export of products covered by the measure. Colombia also noted that the measure could be counterproductive and lead to discrimination as it focused on foreign products which were not produced in the EU.

AGCD To Complete
Keywords
Collapse Market accessMarket access
Collapse Tariff and other quotasTariff and other quotas
Transparency issues
Tariff quota fill
Product/tariff line coverage
Country-specific allocation
Allocation of licences to importing entities
Period of importation and licence validity
Other administration arrangements
ST Annex 5
Autonomous tariff quota access
Other
Collapse SSGSSG
Transparency issues
Trigger calculations
Perishable and seasonal products
Other implementation issues
Link with TRQ commitments
Other
Collapse Other import policiesOther import policies
Scheduled tariff commitments including tariff renegotiations
Import licensing
Import prohibitions and restrictions (including quantitative restrictions)
Minimum import/reference prices
State trading enterprises
SPS and TBT
Other
Collapse Domestic supportDomestic support
Collapse Transparency issues (including Table DS:2)Transparency issues (including Table DS:2)
Transparency issues (including Table DS:2)
Collapse Annex 2 (Green Box)Annex 2 (Green Box)
General services: research
General services: pest and disease control
General services: training services
General services: extension and advisory services
General services: inspection services
General services: marketing and promotion services
General services: infrastructural services
General services: other
Public stockholding for food security purposes
Domestic food aid
Direct payments: decoupled income support
Direct payments: income insurance and income safety-net programmes
Direct payments: payments for relief from natural disasters
Direct payments: structural adjustment assistance provided through producer retirement programmes
Direct payments: structural adjustment assistance provided through resource retirement programmes
Direct payments: structural adjustment assistance provided through investment aids
Direct payments: payments under environmental programmes
Direct payments: payments under regional assistance programmes
Direct payments: other
Other
Collapse Article 6.2 (Special and Differential Treatment / Development Programmes)Article 6.2 (Special and Differential Treatment / Development Programmes)
Investment subsidies generally available to agriculture
Input subsidies available to low-income or resource-poor producers
Support to encourage diversification from growing illicit narcotic crops
Other
Collapse Article 6.5 (Blue Box)Article 6.5 (Blue Box)
Payments based on fixed areas or yields
Payments based on 85 per cent or less of the base level of production
Livestock payments made on a fixed number of head
Other
Collapse Current Total AMS (Amber Box)Current Total AMS (Amber Box)
Scheduled commitment level
Constituent data and methodology (AGST)
Market price support
Market price support: Eligible production
Other product-specific AMS/EMS
Non-product-specific AMS
Negative support amounts
De minimis
Excessive rates of inflation
Other
Collapse Classification of measuresClassification of measures
Classification of measures
Collapse Export competitionExport competition
Collapse Export subsidies subject to reduction commitments (Article 9.1)Export subsidies subject to reduction commitments (Article 9.1)
Transparency issues
Product coverage/scheduled commitments
Incorporated products
Special and differential treatment (Article 9.4)
Government involvement
Downstream flexibilities (Article 9.2)
Other
Collapse Circumvention of commitmentsCircumvention of commitments
Unscheduled export subsidies
Export credits, export credit guarantees, insurance programmes
International food aid
State trading enterprises
Other measures with circumvention potential
Quantity of total exports
Other
Collapse Export restrictions and prohibitionsExport restrictions and prohibitions
Collapse Transparency issuesTransparency issues
Timely notification
Special and differential treatment
Provision of information justifying the measure
Other
Collapse Importing Members' food securityImporting Members' food security
Importing Members' food security
Collapse ConsultationsConsultations
Consultations
Collapse NFIDCNFIDC
Collapse Quantity and concessionality of food aidQuantity and concessionality of food aid
Quantity and concessionality of food aid
Collapse Other forms of assistanceOther forms of assistance
Other forms of assistance
Product Categories
All agricultural products
Collapse Live animalsLive animals
Bovine
Swine
Sheep and goat
Poultry
Horses
Other
Collapse MeatMeat
Bovine
Swine
Sheep and goat
Poultry
Horses
Other
Collapse DairyDairy
Milk
Milk powders
Butter
Cheese
Other
Collapse Other animal productsOther animal products
Eggs
Hair, Shells, bones, etc.
hides and Skins
Other
Collapse Fruit and VegetablesFruit and Vegetables
Fresh vegetables
Processed vegetables
Roots and tubers
Fruit
Nuts
Processed fruit or nuts
Fruit and vegetable beverages
Collapse Coffee, tea, spicesCoffee, tea, spices
Coffee
Tea
Mate
Spices
Collapse CerealsCereals
Wheat
Corn
Rice
Malt
Coarse grains
Collapse Starches, inulin, gumStarches, inulin, gum
Wheat
Corn
Processed vegetables
Roots and tubers
Other
Collapse Oil seeds, fats and oilsOil seeds, fats and oils
Seeds
Vegetable oils and fats
Fats/Oils of animal origin
Other fats and oils
Collapse Residues of processing industryResidues of processing industry
Wheat
Corn
Animal feed
Alcohol residues
Oilcakes and solid residues
Other residues
Collapse Plants and vegetal materialPlants and vegetal material
Live trees and plants
Cut flowers
Animal feed
Gums, saps and resins
Seeds
Medicinal/perfumery plants
Sugar
Other
Collapse SugarSugar
Cane or beet sugar
Other
Collapse CocoaCocoa
Cocoa beans/powder/butter
Other
Collapse Food preparationsFood preparations
Cereal
Oils
Coffee
Tea
Other
Collapse BeveragesBeverages
Waters
Alcoholic
Other
Collapse TobaccoTobacco
Tobacco
Cigars, Cigarettes
Other
Essential oils, fatty acids and alcohols and other chemicals
Collapse FibresFibres
Cotton
Silk
Wool
Other
Collapse non-Annex 1 productsnon-Annex 1 products
non-Annex 1 products
Question Summary
EU's deforestation and forest degradation strategy​
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