The expansion of agriculture commodity production, often for export, is the biggest driver of deforestation in the world, whether it is more land for cattle, soy for animal feed or palm oil plantations. Countries that import those agriculture commodities are starting to grapple with their responsibility for deforestation, the impacts on forest communities and associated greenhouse gas emissions. New rules governing trade in products contributing to deforestation are coming and could have big implications for agriculture supply chains.
Last week, the European Union reached an agreement on a new Deforestation Law that would limit imports of agricultural commodities like beef, soy, cocoa, coffee, palm oil and rubber. The policy requires importing companies to verify products were deforestation-free under a due diligence statement. No later than two years after the directive comes into force, the EU executive will need to look at extending the law to land with high carbon storage and biodiversity value (such as savannahs), as well as other commodities. Companies will have to verify compliance with the country of production’s laws, including human rights and the rights of Indigenous peoples. (FERN hosts a webinar this week on the new law). Other countries, such as the United Kingdom, are similarly taking action to address imports of deforestation-linked commodities.
The Biden administration is on its own slower path, examining this issue. On Earth Day this year, the Biden administration issued an Executive Order on forest protection. The EO requires a report led by the State Department in consultation with other agencies on policy recommendations for a whole-of-government approach to limiting imports from commodities linked to deforestation by April 2023. The State Department sought public input, and IATP submitted ideas for consideration, many of which focused on trade rules and the market behavior of some of the biggest meat and grain companies.
At COP26, 10 of the biggest agriculture commodity traders committed “to halting forest loss associated with agricultural commodity production and trade.” But many of these same companies have made previous commitments, including the United Nations’ New York Declaration on Forests, to halt deforestation in their supply chains going back more than a decade, only to retract those commitments later. Because of the private sector’s track record of backsliding deforestation-related commitments, IATP emphasized the importance of governments setting clear expectations for the marketplace through new rules to address commodity-driven deforestation, with strong regulatory guidelines, requirements for greater transparency and an enforcement system with established penalties. New rules around the trade of deforested-linked commodities should be coupled with targeted aid to help developing countries protect their forests and transition toward more agroecological, sustainable agricultural production and rural economies.
Developing countries have raised important questions, grounded in equity, about the proposed European Union and U.K.’s deforestation rules. Brazil has raised complaints about U.K. proposals to block companies from using products from deforested land, warning of a challenge at the World Trade Organization, pointing out that such rules give advantages to developed countries where much of their forests have already been deforested and discriminate against tropical, developing countries. Developing countries have criticized the EU’s deforestation regulation as protectionist and punitive against developing countries, claiming that the regulation disregards local conditions and legislation to protect natural resources and would require costly traceability requirements. In response to some of the criticisms, the EU has created a fund to help trading partners respond to the new regulation.
The integration of human and community rights is essential for any international policy framework on deforestation. It is well documented that human rights violations and infringement of the rights of Indigenous peoples are often linked to land and forest protection. According to Global Witness, at least 613 Indigenous leaders have been killed over the last decade in protecting their land and environment, and over 200 land and environmental defenders were killed in 2021 alone. Any policies designed to limit global deforestation should be linked with protecting human and community rights, as well as providing finance and incentives to aid countries and communities’ transition toward more sustainable economies.
Aligning any new U.S. rules with the new EU Deforestation Law would be beneficial in moving countries toward some common international standards. The WTO’s Committee on Trade and the Environment has discussed both the EU deforestation rule and the U.K. deforestation rule, and the U.S. should be active in those discussions.
To be consistent with WTO rules, U.S. policies on international deforestation should adhere to the WTO principle of non-discrimination between products from different countries and between domestic products and imports. The measure must be enforced evenly between domestic and foreign products and between different foreign countries. And the U.S. government should set its own criteria that importers must meet to satisfy its deforestation-free requirement — it should not rely on private certification schemes that may be exclusionary to act as a substitute to government set criteria that apply to all. Private certification schemes on deforestation have a poor track record and are often full of loopholes that hinder effective outcomes, according to an extensive analysis by Greenpeace.
IATP also highlighted three complementary policies that could bolster executive action on trade in deforested-linked agriculture commodities:
- The FOREST Act — This bill includes several provisions similar to the EU Deforestation Law. It would: Prohibit agricultural commodities produced on illegally deforested land from entering the U.S. market; require companies to report on supply chain traceability for commodities linked to deforestation; increase U.S. support for countries taking meaningful steps to improve governance and reduce deforestation; and establish a federal government procurement preference for zero deforestation products.
- Mandatory Country-of-Origin Labeling (COOL) of beef and pork — While there is mandatory COOL for poultry and fruits and vegetables, there is none for beef and pork. Beef and pork production, including soy and corn for feed, are expanding in countries experiencing deforestation. While the WTO has ruled against several versions of mandatory COOL for beef, there are WTO-compliant options available, including bipartisan legislation in Congress led by Senators Tester and Rounds. The USDA can take immediate action to eliminate loopholes in “Product of USA” labeling that allow beef or pork produced in other countries to be labeled as a U.S. product.
- Climate Peace Clause — There are a rising number of trade-related attacks on climate policies, particularly related to green jobs programs (for example, recent trade threats against the Inflation Reduction Act). It will be essential for the U.S. and trading partners to implement a host of new climate policies to meet commitments under the Paris Climate Agreement. Under a Climate Peace Clause, all parties agree not to use the dispute resolution process in trade or investment treaties to block climate action. The U.S. should begin incorporating a Climate Peace Clause within future and existing trade agreements.
Changing the rules on the trade of deforested-linked commodities could not only reduce carbon dioxide emissions released from forests and the further carbon sequestration that could come from intact forests, it also can help curb the steady rise of agriculture-related greenhouse gas emissions (methane and nitrous oxide) tied to expanded land use to feed an industrial system of production. This is particularly true for rising emissions from the expansion of industrial animal agriculture systems worldwide, which rely on the heavy use of nitrogen fertilizer for animal feed.
Government action to limit global deforestation is urgent and new trade rules will be essential, but a more comprehensive approach will be needed. A recent FAO report found that Indigenous communities were by far the best guardians of forests. As the U.S. government enters this arena, it will be critical for the Biden administration to work with other countries who are leading, such as the EU, countries directly dealing with deforestation, and the communities already protecting the forest.