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​Indonesia voiced support to the question. Brazil and Paraguay were surprised that the EU forgot to respond to the question which was raised by Brazil and two co-sponsors 3 months ago and received follow up comments from five Members.

Paraguay sought the EU's clarification, regarding its reply to the second part of the question, if the EU took into account the level of deforestation within the EU itself vis a vis the countries exporting to the EU. Paraguay recalled that on the one hand, Members had common but differentiated responsibilities, and on the other many Members, including Paraguay, had forests that have been preserved throughout the years in bigger proportion than those in the EU.

Brazil delivered a detailed statement as follows:

Brazil believes that such proposal establishes an illegitimate obstacle to international trade, is strongly discriminatory in nature, and will have little, if any, impact on its alleged goal of reducing deforestation and forest degradation.

1) The proposed regulation does not contribute to the fight against deforestation

Deforestation is a multivariable problem that should be dealt with through comprehensive public policies in the short, medium and long term. Illegal activities linked to deforestation must be halted. Alternative means of livelihood must be made available to the millions of people that live near forests. Sustainable production practices must be fostered and scaled-up.

Trade restrictions, in that sense, have very serious limitations.. They unfairly punish most of rural producers and do not provide any other remedy against direct and indirect drivers of deforestation. By acting as an obstacle to economic development, trade restrictions actually reinforce some of the dynamics that led to deforestation and reduce governments' capacity to deal with this issue.

The proposed regulation is also heavily skewed towards punishment and disengagement by excluding from the EU market any producer suspected of having links to deforestation (or worse still, based on an area regarded as high risk, regardless of the specific sustainability credentials of each producer) with no flexibilities or margin for remedial or compensatory action such as reforestation. Once cut off, producers no longer have any incentives to improve their practices and will probably also lack the means for doing so.

2) International trade contributes to the fight against deforestation

Sustainable development only materializes through the simultaneous improvement of its three core dimensions: economic, social and environmental. It is precisely because international trade helps improve conditions in all three that it can be such a powerful tool in that process. International trade has a proven beneficial effect by providing opportunities for medium and small companies, as well as for families, to access new markets and improve their income, escape poverty and improve their economic and social conditions. Frequently that is also what is necessary to enable those stakeholders to improve their environmental practices and to abandon environmentally harmful production methods. These effects have been repeatedly acknowledged and demonstrated by several UN agencies, the WTO, and the EU itself, which is one of the leading providers of Aid for Trade.

The European proposal, nevertheless, disregards such positive effects and instead proposes to restrict trade by imposing a potential ban on the trade of several commodities based on an unnecessarily strict concept of "deforestation-free products" which diverges from the 2030 Agenda for Sustainable Development and all relevant multilateral environmental agreements, including the UNFCCC and the CBD, which acknowledge the importance of notions such as sustainable use, ecosystem regeneration, reforestation, among others.

The EU's proposed regulation is, therefore, likely to have very little impact in terms of actually reducing deforestation. It lacks any provisions or pathways for rehabilitation, and offers no incentive for struggling producers to improve their practices. Instead, it promotes disengagement and punishes even those producers that may have been acting in accordance with domestic law and with international standards of sustainability. In Brazil`s view, a policy of trade promotion within a cooperative framework that engages producers and producing countries to promote and incentivize change towards better and more sustainable production practices is the only effective means to reduce deforestation and forest degradation rates.

3) The Benchmarking system is discriminatory and distorts trade

The proposed country benchmarking system, with its tier classification, will not contribute to fighting deforestation and forest degradation. On the contrary, it will only promote trade diversion. There are several reasons to believe that a benchmarking system in general, and more specifically, the benchmarking system proposed by the Commission, is an entirely inefficient tool when trying to halt deforestation and forest degradation.

First, the benchmarking system is inherently discriminatory and will impose different treatment to producer countries, based on a unilateral decision, by the European Commission, in light of criteria as subjective as the suitability of a country`s environmental laws and enforcement capabilities (Art. 27.2(f)).

Second, by mandating "enhanced scrutiny" over products originating from high risk countries it stigmatizes entire countries and penalizes those producers that produce in a sustainable manner in those countries.

Third, it creates a significant incentive for trade diversion as operators interested in escaping the heavy administrative and financial burdens related to the due diligence system - and in avoiding the possibility of heavy penalties as well as the reputational risk associated with importing from a high risk area - would tend to simply abandon all exchanges with those countries/areas and merely switch to other sources.

The benchmarking system, therefore, far from creating incentives for improving sustainability practices and credentials, will promote disengagement in precisely those areas that would most benefit from, and perhaps most require, cooperation and engagement. For this reason, it is very unlikely to have any positive effect, and may even have negative effects, on forest degradation and deforestation rates.

4) The proposed regulation must be adapted to the production reality on the ground

The proposed regulation has been designed in such a manner as to be disconnected from the actual production practices and the way the supply chains have been organized over the past decades. For the Regulation to work, it is imperative that the due diligence system is adapted to the production characteristics and needs of each covered commodity.

It imposes a "top-down", "one size fits all", very detailed and cumbersome due diligence obligation on traders and operators within the EU Market, which includes a heavy informational and documentary burden as well as full geo-localization and traceability requirements throughout the supply chain. This system is then complemented by comprehensive and strict provisions on monitoring and enforcement, and by heavy penalties in case of non-compliance, not to mention the possibility of transferring the costs of enforcement to traders and operators.

Such a system completely disregards the very significant differences in the way the covered commodities are produced and their supply chains organized. It ignores, for instance, the fact that some of the commodities are largely produced by smallholders (like coffee), as well as the fact that supply chain for several commodities (coffee and soya, for example) usually includes several links between producer and trader/operator. It also does not take into account the fact that those commodities are usually stored, along the supply chain, not according to origin/producer, but to other criteria related to their physical characteristics, quality and chemical composition.

All of this means that the system of geo-localization and traceability envisaged by the European Commission and supposed to apply to all six commodities is simply not feasible in the short or even medium term, as confirmed by several stakeholders, both Brazilian and European, across several of the affected commodities' supply chains.

It also completely disregards all efforts made by producers and traders/operators alike, during the past several years, to improve their own sustainability, due diligence and traceability practices and to adapt them to the necessities of their respective supply chains. Instead of taking into consideration the experience gained during that process, the Commission now simply aims to replace everything with a unified and overly rigid and demanding new system.

As a result, the regulation, if approved, will likely result in significant disruptions of supply and even shortages as operators and traders will be unable to comply with the stringent requirements contained therein and forced to restructure entire supply chains. It will also likely result in significant price surges for European consumers and for European producers using the covered commodities as inputs, in a time where inflationary pressures are already intensifying and food security is under stress.

5) The proposed regulation should foster cooperation and focus on the future It is disappointing that the European Commission has decided to pursue an avenue of unilateral legislation and enforcement when it comes to an issue of such importance as reducing deforestation worldwide. There are several appropriate multilateral fora in which initiatives to reduce deforestation could have been discussed with a more significant participation and engagement from producing countries. Brazil is convinced that the EU`s proposal would have benefited, during its inception, from a more open and participative process which actually took into account the realities, challenges and experiences of producing countries. At the very least, such a process would have contributed to a fairer, less commercially harmful legislation, with less of the aforementioned technical and conceptual problems.

6) The proposed regulation should have objective criteria

The criteria used to evaluate the risk of non-compliance with the regulation are not sufficiently clear and objective. It contains unclear parameters, including governance criteria, which are not always related to deforestation risk. Furthermore, they may be applied in a discretionary manner by the Commission, which is not required to justify country categorization or decisions regarding (non) compliance with the regulation. In addition, those criteria are not internationally agreed and there is no harmonized methodology to assess and evaluate them. This lack of objective criteria, besides reinforcing the perception of a unilateral and arbitrary legislation, is an obstacle to the very participation of countries and producers in the evaluation process, which is not guided by international and consensual values and measures. Only legislation with shared and objective parameters would allow producer countries to participate in the conformation and implementation of the system and give them more predictability in their evaluations.

7) The proposed regulation is not compatible with WTO rules

The proposal poses evident challenges to the spirit and letter of the multilateral trading system. Several of its elements are potentially inconsistent with one or more provisions of the WTO Agreements. For instance, the proposed regulation and, more specifically, the benchmarking system appears to be inherently discriminatory and has the potential to severely limit and distort trade. A significant number of other provisions contains elements of arbitrariness and discrimination, ranging from the scope of the measure to the monitoring and enforcement mechanisms set out in it.

While the EU is free to pursue legitimate public policies objectives, it must do so in a manner that is consistent with the EU's commitments under the multilateral trade rules.