EU deforestation law to be delayed as new threat emerges from EU-Mercosur trade deal

Brussels / Strasbourg, 17 December 2024 – The European Parliament is expected to confirm a one-year delay in the application of the EU Deforestation Regulation (EUDR) in a vote today, following a late, failed attempt by the European People’s Party to weaken the landmark law. But the ratification of the EU-Mercosur trade deal agreed last week could still deal a fatal blow to the EUDR, according to Greenpeace.

The EUDR covers products that are linked to deforestation and forest degradation, like beef, chocolate, palm oil, coffee, rubber, soy, and wood. For companies who wish to sell these products in the EU, the EUDR requires them to guarantee that their products are legal and deforestation-free.

If the vote passes today as expected, the EUDR will start to apply from 30 December 2025 for medium and large operators, and from 30 June 2026 for small and micro-enterprises.

The context and manner in which the EUDR will apply may fundamentally change, however, following the conclusion of negotiations for a free-trade agreement between the EU and the countries of the Mercosur bloc (Argentina, Brazil, Paraguay and Uruguay). The European Commission’s directorate-general for trade (DG Trade) led the negotiations on behalf of the EU.

In contrast to the EUDR – which was agreed in a standard, participatory democratic process in 2022, with broad public engagement and support – the controversial EU-Mercosur agreement, which will significantly affect the EUDR’s enforcement and implementation, was negotiated behind closed doors by a  single department within the European Commission, said Greenpeace.

Greenpeace EU trade campaigner Lis Cunha said: “Who really makes the rules in the EU? A one-year delay in protecting forests is bad enough, but there’s worse in store because one department in the European Commission in charge of trade has negotiated a treaty behind closed doors that will significantly affect how the EU deforestation law will work in practice.

“It’s appalling that president von der Leyen gave this agreement a green light. Governments and the European Parliament must prevent the ratification of this toxic deal. The Commission’s DG Trade should call itself ‘DG B-Trade’, because they’ve betrayed Europe’s citizens and the Amazon rainforest. I’ll let you imagine what the ‘B’ might stand for.

“The EU deforestation law was agreed in 2022 by all EU institutions. It is based on the simple principles that the EU must take effective steps to limit the impact of European consumption on precious ecosystems, and that companies have a responsibility to ensure that their own supply chains are clean,” added Cunha.

Trumped by EU-Mercosur

In the annex to the trade and sustainable development chapter (the TSD annex) of the EU-Mercosur agreement, several provisions entail fundamental changes in how the EUDR will work in practice.

The EU-Mercosur agreement appears to contradict the guidance the European Commission issued on EUDR implementation in November 2024. The EUDR works on the principles of objective criteria, traceability, obligations on economic operators to carry out due diligence on their supply chains, and enforcement by EU competent authorities.

Under the EUDR, operators are free to use certification schemes as complementary information, but certification schemes on their own are not a guarantee of compliance and do not exempt operators from their due diligence and compliance obligations. The Commission’s guidance states that “the use of such schemes does not imply a ‘green lane’ since the operator is still required to exercise due diligence and is held liable if it fails to comply.”

In contrast, the European Commission has agreed in the TSD annex to the EU-Mercosur free trade agreement that:

• EUDR competent authorities shall consider any certification schemes recognised  by the Mercosur countries as a source to determine compliance of products with EUDR traceability requirements (clause 56 (b)),
• Mercosur competent authorities may intervene in EUDR enforcement actions, a role not foreseen in the EUDR (clause 55 and clause 56 (c))
• The EU-Mercosur agreement, which in itself does nothing to reduce deforestation and forest degradation, shall be “favorably considered” for the rating of Mercosur countries under the EUDR country benchmarking, whereas that process should be led by quantitative, transparent and objective criteria and not be driven by political or trade considerations (clause 56 (a)),
• A state or a regional organisation like the EU should avoid actions to address environmental challenges outside its own jurisdiction if such actions would restrict international trade (clause 10).

These terms and other aspects of the EU-Mercosur agreement may have wider implications, such as the chapter on dispute settlement and the potential obligation of parties to offer compensation to other parties for environmental measures that have an impact on trade. In particular,, the deal may affect any measures which attempt to address the impact of European consumption beyond EU borders, including measures that have not yet been fully implemented, which could include not only the EUDR but also measures like the corporate sustainability due diligence directive (CSDDD), and the carbon border adjustment mechanism (CBAM).

Next steps

Once the European Parliament and EU governments have given their approval to amend the date of application of the EUDR, the delay will need to be published in the EU’s official journal before 30 December 2024 to become law.

The EU-Mercosur deal will need to be ratified in Europe and in Mercosur countries. In the EU, the agreement should in theory be agreed unanimously by all EU governments, by a majority in the European Parliament and later be scrutinised and voted on by national and some regional parliaments. But the European Commission has come under intense criticism for its plans to split the EU-Mercosur deal up into separate instruments in a way which removes EU national governments’ right to veto and which cuts out national and regional parliaments from having their say on the deal.

By announcing the EU-Mercosur deal as a “partnership” agreement rather than the originally envisaged “association” agreement, the Commission appears to confirm that it plans to use this splitting strategy to circumvent democratic scrutiny at national and regional level. The European Parliament and national EU governments may now be the only institutions in Europe which can reject the deal.

Governments in France and Poland, two of the largest and most populous EU countries, have said that they oppose the EU-Mercosur deal. Austria is bound by a parliamentary resolution to vote against it. Several others, like Ireland, the Netherlands, Belgium and most recently Italy have also expressed significant concerns.