The message behind the introduction of the rebalancing mechanism is that “environmental protection has a cost for society, but business is not required to pay for it,” the NGO said in its analysis.
It warned that it risks undermining through a backdoor a flagship element of the European Green Deal and set a dangerous precedent. Other countries with which the EU is in trade talks, such as Indonesia, have slammed the anti-deforestation rules for years, claiming it is green protectionism.
By agreeing to this mechanism, “the Commission has shot itself and member states in the foot when it comes to implementing the EUDR,” said Michael Rice, a value chain and trade lawyer with the environmental legal charity ClientEarth. “The Commission has potentially made every member state vulnerable to trade disputes from Mercosur countries when they comply with their obligations to apply the EUDR to products from Mercosur countries,” he added.
Who’s right?
The question of who’s right in their interpretations of the impacts of the Mercosur deal on the EUDR is set to give trade wonks a headache.
“The document was drafted in such a way that both sides can claim victory,” said Geraldo Vidigal, a Brazilian professor in international trade law at the University of Amsterdam.
But it’s not only the rebalancing mechanism that risks weakening the EU Deforestation Regulation, according to ClientEarth’s Rice. It’s also the annex to the Mercosur agreement’s trade and sustainability chapter.
Some of the clauses, in particular articles 55 and 56, in this annex “would force EU Member States and the Commission to act inconsistently with their obligations under the EUDR” and “allow Mercosur countries to influence how the EUDR is implemented and enforced,” Rice said.
This could increase the “political and diplomatic pressure from Mercosur countries” and “risks jeopardising the careful and fair application of the EUDR,” he warned.
