Trade Negotiations and Import Restrictions Could Slow Deforestation, Reports Say

The reports, released by the State Department May 31, were the result of an interagency effort to respond to an executive order in April 2022 that asked agencies what they could do within the confines of existing law to address deforestation and land conversion. One avenue the executive order contemplated was either through implementing trade agreements or through negotiating new trade agreements. The Office of the U.S. Trade Representative, USDA, DHS and others contributed to the reports.

The report on trade and deforestation noted that the government is already trying to tackle the issue, whether through the forestry annex in the U.S.-Peru FTA, the Lacey Act or talks with countries with which there is no FTA, such as Brazil.

With the exception of Peru, most trade agreements just ask that the partner country faithfully follow its own environmental laws. The report noted that "in-country capacity and other issues can limit effective implementation of deforestation-related provisions by our trade agreement partners. U.S. trade agreements’ focus on illegal deforestation through provisions related to enforcement and maintenance of environmental laws may limit the extent to which existing trade agreements can contribute to overall country efforts to halting and reversing deforestation, depending on the country and the extent of deforestation not covered under country laws."

So negotiating new trade initiatives, such as the Indo-Pacific Economic Framework, could help the U.S. address deforestation more directly with trade policy, "but must be coupled with sufficient country governance and enforcement capacity to be effective," the report said. The writers suggested that there could be technical training to partner countries, or aid for alternative livelihood programs for people who would otherwise clear tropical rainforests for farming.

The report also warned: "New actions or policies to address deforestation and land conversion risk may create unjustified barriers to trade and provide little or no protection for global forest resources if not designed thoughtfully.

"Poorly designed policies and programs could be perceived as discriminatory trade practices and an attempt to privilege U.S. agricultural exports in the global market, may result in a bifurcated market of deforestation-free and deforestation-linked commodity production and trade, or result in reversal of global development progress, particularly in rural settings."

The report said "the primary direct driver of global deforestation is the conversion of land to produce major agricultural commodities, primarily cattle, oil palm, soy, cocoa, coffee, wood fiber, and rubber, in a relatively small number of countries that are highly concentrated in the tropics." The U.S. is not as big a buyer as China, India and the EU of these goods from high-risk countries, the report said. Tropical deforestation accounts for about 8% of global greenhouse gas emissions, it said.

The report noted that the EU has issued a deforestation-free regulation that requires importers and producers to engage in due diligence to ensure the cocoa beans, palm oil or other commodities in their products do not come from recently deforested land (see 2212280032). It said some stakeholders and governments have questioned "the feasibility, efficacy, and fairness of such approaches."

The report said, bolding for emphasis, "Additional analysis needs to be conducted to fully inform understanding the feasibility -- and expected impacts -- of possible regulations or legislation addressing illegal deforestation or all deforestation in commodity supply chains, in particular mandatory measures related to trade or imports."

Some of the issues that need more scrutiny, they said, are the distinction between due care and due diligence; whether the agencies already have the authority they need to keep out goods produced on illegally deforested land; and whether it's feasible to address derivative products of the commodities that tend to be grown on recently cleared tropical rainforests.

It also said there should be analysis of trade data by commodity and by country to "help identify where U.S. import actions could have the most effect."

The report gave pros and cons of limiting enforcement to goods produced on illegally cleared land. If you limit it to illegal deforestation, that respects countries' sovereignty in being able to have their own priorities for land use.

"Evidence shows that a focus on illegal production and trade can have a measurable effect. In less than ten years after the 2008 Amendments to the U.S. Lacey Act, it was estimated that imports of illegal wood products into the United States declined by between 32 and 44 percent," the report said.

"However, approaches associated with restrictions on commodities produced on illegally deforested land present significant resource and logistical challenges related to application and/or enforcement. Identifying areas of illegal deforestation requires land-cover and land-use mapping and monitoring over time," it said.

But limiting it to illegal deforestation can create perverse incentives to expand legal deforestation, they noted, and in some countries, the scope of legal deforestation may already be so broad that it would not curb the practice enough to cause a significant reduction in emissions.

Ultimately, they wrote, "whether addressing only illegal, or all, commodity-driven deforestation, measures focused on trade or import restrictions face similar challenges, including: defining due care or due diligence requirements and enforcement if relevant; complexity and difficulty of achieving traceability of commodities to a specific piece of land; and the potential diversion or leakage of questionable products to less regulated markets."