EUDR postponement: European Union bows to international pressure

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Postponement of European environmental regulation brings temporary relief to Brazilian exporters, but maintains uncertainty and generates criticism from environmentalists

The European Union (EU) has decided to postpone the implementation of its anti-deforestation law, Regulation for Deforestation-Free Products (EUDR), following intense pressure from producer countries and European companies themselves. Originally scheduled to come into force at the end of 2024, the EUDR is now expected to be implemented in 2025 for large companies and in 2026 for micro and small companies, as announced by the European Commission.

The EUDR represents a significant shift in international trade, requiring countries exporting to the EU to ensure that their products are not linked to deforestation. Focusing on seven key commodities (soy, beef, palm oil, coffee, cocoa, timber and rubber), the EUDR imposes strict requirements to ensure that these products come from deforestation-free areas by a specific deadline of 31 December 2020. These regulations aim to promote sustainable practices and reduce the EU’s contribution to global deforestation.

However, implementing this regulation presents complex challenges for exporting countries such as Brazil. Traceability and proof of origin requirements pose a significant obstacle, particularly for traditional communities and small farmers, who often lack the resources and infrastructure to meet these demands. The following analytical framework details the main aspects of the EUDR, its rules and the impacts that may be felt in Brazil.

Table 1 – Aspects of the EUDR that may impact Brazil

Appearance	Description	Impact on Brazil
Due diligence	Exporters outside the EU must prove that their products come from areas that have been deforestation-free since 2020. This includes collecting geographic and environmental data from production areas in order to demonstrate compliance with the EUDR.	It requires investments in technology and traceability systems for Brazilian exporters, increasing operational costs.
Risk segregation	The EUDR classifies countries and regions as having low, medium or high risk of deforestation. Exporters from high-risk countries are subject to stricter controls, which increases the complexity and cost of compliance for these exporters.	High-risk countries, such as Brazil, will have more difficulties and costs in meeting the requirements, which may negatively impact Brazilian exporters.
Target commodities	The regulations include commodities associated with deforestation, such as soy, beef, palm oil, coffee, cocoa, rubber and timber. Derivative products also need to comply with the requirements, such as leather and wooden furniture.	Brazilian exporters of soy, meat and coffee, among others, will have to meet strict requirements, which could limit access to the European market.
Implementation and penalties	Large companies have 18 months to comply, while micro and small companies have 24 months. Non-compliance can result in fines proportional to the company's turnover in the EU, confiscation of assets and trade restrictions.	Possible financial losses and reduced access to the EU market if they fail to comply with the requirements. Beef and soy sectors are particularly affected.
Impact on traditional communities	Traditional communities, including indigenous peoples, face challenges with the EUDR due to the requirement to prove the origin of products and compliance with environmental standards. These communities often lack the technological resources or institutional support needed to provide detailed traceability data. This can lead to their products being excluded from the European market, impacting their livelihoods and access to international markets.	The lack of infrastructure and support makes it difficult for traditional communities to comply, and they may be excluded from markets such as the EU. This directly affects the income and sustainability of these populations.

The EUDR is a central piece of a broader EU climate policy, integrated into the European Green Deal, which aims to achieve ambitious sustainability and climate neutrality targets by 2050. While these initiatives aim to reduce environmental impact and protect global forests, they have generated controversy and drawn significant criticism. In Europe, farmers and other affected sectors have protested against what they see as overly restrictive regulations that jeopardize their competitiveness and increase production costs (see: Times of Crisis: An Analysis of Agricultural Demonstrations in Europe).

The EUDR, although an ambitious attempt by the European Union to mitigate global deforestation, has been criticized for its lack of clarity and operational complexities. The regulation requires exporters to provide detailed evidence of compliance, but does not specify which documents will be accepted by European authorities, which creates uncertainty. Small farmers and indigenous communities, who often lack the resources to comply with these traceability and monitoring requirements, are particularly vulnerable. In addition, the lack of a unified standard between monitoring systems and databases can result in contradictory information in the due diligence process, increasing compliance costs for Brazilian producers. The lack of clear criteria for risk classification of countries and regions is also a point of criticism, as these areas can be reclassified without prior notice, directly affecting the competitiveness of exporters in the European market.

Another point criticized in the EUDR is that it does not take into account environmental legislation and the dynamics of vegetation in each country. Nations that still have a large part of their native vegetation preserved end up being disadvantaged compared to countries that have already lost most of their forest cover. The regulation does not differentiate between legal and illegal deforestation, creating barriers that may not reflect the reality of sustainable practices adopted locally. This puts producers who operate in accordance with national laws at a disadvantage compared to countries that, having already devastated their forests, can now adopt less rigorous agricultural practices in terms of environmental compliance.

In addition to external criticism, the EU’s own position as a global leader in combating deforestation is being challenged internally. Many Europeans question whether the EU is actually meeting its own emissions reduction targets before imposing policies on other countries. This stance is seen as an interference in the sovereignty of exporting countries, which face complex and varied local challenges.

The postponement of the EUDR has been welcomed in Brazil, as it provides an opportunity to reassess requirements and adjust monitoring practices. According to a recent study conducted by the federal government (Brazil, 2024), the regulation could affect up to 15% of total Brazilian exports.

Insper Agro Global estimates for the agricultural sector indicate that, in 2022, 65% of products exported by Brazil to the EU will be subject to the EUDR. However, this volume is equivalent to only 10% of total Brazilian exports in the same year (see chart). Although the impact of the EUDR is relevant for products destined for the European market, its influence on the Brazilian economy as a whole is limited.

While the deadline extension is seen as a temporary relief, it does not eliminate uncertainties regarding specific criteria and compliance guidelines, which remain significant challenges for Brazil and other exporters.

On the other hand, the postponement has drawn intense criticism from environmentalists and civil society, who consider it a setback in global efforts to combat deforestation. This group argues that the extension favors commercial interests over environmental protection, delaying necessary and urgent changes in production chains. The decision is seen as a blow to the European Union's climate leadership, compromising the bloc's credibility in meeting its environmental goals, such as those established in the Paris Agreement.

The EUDR, with all its complexity, is a reminder that global sustainability is not just about intentions, but also about political and economic realities that do not always converge. For Brazil, the regulation represents an opportunity to reaffirm its commitment to sustainable practices, but it also highlights the importance of an open and balanced dialogue with the European Union. It is important to recognize that, although combating deforestation is urgent, it should not be done at the expense of fair and equitable treatment between nations. The future of trade relations between Brazil and Europe will depend on how these two blocs can collaborate to transform sustainability into a bridge, not a barrier. By strengthening partnerships and considering the particularities of each country, the EU and Brazil have the chance to lead a new model of environmental cooperation, where global efforts advance together with prosperity and economic justice for all involved.

References and recommended readings:

BRAZIL. Ministry of Development, Industry, Commerce and Services. Proposal to postpone anti-deforestation law recognizes government's request for greater clarity in the law. Oct 02, 2024. Accessed on: Oct 14, 2024.

EUROPEAN COMMISSION. EU Deforestation Regulation implementation. Press release, 2024. Accessed on: 14 Oct. 2024.

FOLHA DE S.PAULO. EUDR: Europe proposes postponing anti-deforestation law. Café na Prensa, 2024.

INSPER AGRO GLOBAL. Brazilian agriculture escapes the new chapter of the European decarbonization plan. Insper, 2024.

INSPER AGRO GLOBAL. International pressure against deforestation increases. Insper, 2022. Accessed on: October 14, 2024.

INSPER AGRO GLOBAL. Times of crisis: An analysis of agricultural protests in Europe. Working paper no. 3-2024. Insper, 2024. Accessed on: October 14, 2024.

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