“Disconnecting agribusiness from deforestation must be an objective for all production chains…”
Rodrigo Lima is Managing Partner at Agroicone, a lawyer, holds a Master’s degree in International Law from UFSC, and a PhD in Law of International Economic Relations from PUC-SP.
AgriBrasilis – How can we distinguish environmental requirements from trade barriers?
Rodrigo Lima – Barriers to international trade are justified on the basis of various arguments (tariffs, technical requirements, sanitary issues, dumping, environmental requirements), within the broader context of tariff and non-tariff barriers.
Environmental issues can support measures that create barriers or, depending on the case, requirements that generate costs for international trade operators.
AgriBrasilis – To what extent is an environmental requirement justifiable and able to restrict trade?
Rodrigo Lima – A standard adopted in one country and required for imports from third countries can be challenged, but it is the importer’s rule. When a country establishes requirements that go beyond the laws of the producing country, creating an extraterritorial effect, it usually becomes a barrier. The case of zero deforestation is a concrete example, since legal land conversion may occur in certain cases in Brazil.
The World Trade Organization (WTO) does not have clear rules to address the creation and implementation of environmental measures, and it increasingly faces a wide range of such measures. Carbon border measures are a clear example. There are several approaches aimed at measuring the carbon footprint of products, each using different methodologies to calculate emissions, resulting in different outcomes. There is fragmentation of measures without a common approach, which can generate trade restrictions.
It is reasonable to say that finding ways to address the interfaces between climate and trade is one of the major challenges for the WTO.
AgriBrasilis – What progress was made at COP30 to prevent the adoption of unilateral trade measures?
Rodrigo Lima – COP30 approved a three-year cycle to discuss climate measures that may affect international trade, to take place during the subsidiary body meetings held in June in Bonn. Additionally, under the action agenda, the Integrated Forum on Climate Change and Trade (IFCCT) was created, serving as a space to bring together climate and trade experts to find solutions that integrate trade as an ally in achieving climate mitigation and adaptation goals.
We can expect intense discussions aimed at finding ways to use trade as a tool to achieve mitigation and adaptation results, rather than assuming that trade barriers based on emissions will enable climate objectives to be met.
AgriBrasilis – Which agribusiness chains are most exposed to these barriers and requirements?
Rodrigo Lima – The main issue related to agricultural production chains concerns deforestation, which has become a critical topic at the multilateral level. This suggests that it is essential to prove that there is no illegal deforestation associated with production and, in cases such as European Union requirements, that there is no deforestation, including legal conversion. This remains a major challenge, as the evaluation of the Rural Environmental Registry (CAR) does not progress quickly, and managing deforestation by land category is a major bottleneck in Brazil.
Livestock, soybeans, cocoa, cotton, ethanol, coffee, among others, are chains that need to manage deforestation risk and avoid illegal land conversion.
The use of pesticides, the carbon footprint of certain products, social issues, soil degradation, and animal welfare are other environmental and social requirements linked to the sustainable production debate that are relevant to Brazilian agribusiness chains.
It is important to emphasize that tropical agriculture has enormous advantages when it comes to characterizing sustainable production. The conservation of native vegetation on farms, the recovery of degraded areas, no-till farming, the use of biological nitrogen fixation, integrated pest management, and the increasingly widespread use of bioinputs are elements that add value and make tropical agriculture more resilient, productive, and sustainable.
AgriBrasilis – Who pays the costs of environmental compliance?
Rodrigo Lima – There is a category of requirements that stem from rules already adopted in Brazil, meaning producers and companies must comply with them. Requirements that go beyond national laws, imposed by the importer’s regulation or by standards applied by buyers, become market-access conditions and therefore must be fulfilled by producers and exporting companies domestically.
The expectation that it is possible to pass on or at least share the costs of complying with environmental requirements does not materialize. Except for premiums in some certification processes or better pricing achieved in certain higher-value markets.
AgriBrasilis – How will the Mercosur–European Union Agreement impact Brazil’s environmental and climate commitments?
Rodrigo Lima – The EU–Mercosur Agreement includes important provisions aimed at integrating the climate objectives of European and Mercosur countries. Each country has its own targets and must implement them in line with the Nationally Determined Contributions (NDCs) presented and updated under the Paris Agreement. However, it is important to highlight that the European Union has specific rules, such as the EUDR, which requires zero deforestation as of January 1, 2021, regardless of the fact that Brazil’s Forest Code allows legal deforestation in specific cases. The EU also adopts rules calculating the carbon footprint of different biofuels, requiring compliance with various criteria to access the European market.
As Brazil reduces deforestation and expands production following low-carbon agricultural practices, it will add environmental attributes to agribusiness products, which can be positive. Seeking European recognition of these measures, however, is an ongoing challenge that must be pursued by Brazil within the Subcommittee on Trade and Sustainable Development to be created under the Agreement, as well as by the private sector.
AgriBrasilis – How can Brazil turn climate requirements in international trade into competitive advantages?
Rodrigo Lima – Demonstrating that production chains adopt low-carbon agricultural technologies, conserve native vegetation on farms, restore degraded areas, do not cause illegal deforestation, and are inclined to reduce legal conversion, provided there are compensations that value forests, requires greater transparency about private sector practices and public information that depends on government agencies.
For example, it is urgent to improve deforestation data, distinguishing between legal and illegal conversion by land category. Disconnecting agribusiness from deforestation must be an objective of all production chains, especially when it is estimated that more than 90% of conversion in the Amazon results from illegal activities. Transparency is key to strengthening production chains and increasing access to more demanding markets.
It is estimated that there are more than 200 million hectares of native vegetation on farms, but the Rural Environmental Registry (CAR) evaluation must be completed to clarify these data.
Brazilian agribusiness has distinctive features that can become competitive advantages. This must be addressed with a long-term vision, as demand for products that meet environmental requirements is likely to increase. It is worth noting that the strength of Brazilian agriculture will always motivate the adoption of measures that may become barriers. In this sense, underestimating environmental issues can strengthen arguments aimed at restricting Brazilian products.
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