Link to Article: https://www.euronews.com/green/2024/09/12/punitive-instrument-brazils-say-eu-deforestation-laws-will-affect-one-third-of-exports
European Union Site: https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/brazil_en#:~:text=The%20EU%20is%20Brazil’s%20second,total%20EU%20trade%20(2017).
A law passed by the European Union (EU) in 2022, the EU Deforestation-free Regulation (EUDR) will come into play at the end of 2024. The law was adopted in June 2023, which has given businesses 18 months to adapt to the news rules. However, Brazil is asking the EU to hold off on implementing the rules because it would affect about one-third of the country’s exports. This includes: soy, beef, palm oil, coffee, cocoa, rubber, wood and derivatives, including leather and furniture. Brazil made around 42 billion euros in 2023 off of its forest goods alone, that is 46.3 billion US dollars.
In response to Brazil’s request for extended time, the EU has considered either delaying the law or even simplifying the rules/regulations to reduce the impact on the Brazilian economy. This article is very important because the EU is one of Brazil’s biggest trading partners. I believe Brazil is going to struggle to stay on their feet if this law is implemented due to the fact that it will affect their economy drastically by reducing their annual income by 15 billion dollars (13.6 euro) a year. It could lead to a rapid decline in Brazilian trade relations with countries associated with the EU. This means that all the countries in the EU will have to produce some form of replacement for the products that will be regulated.
As of the moment Brazilian officials laid out their concerns to the EU at a meeting in Brasilia. If the EU goes through with the law, Brazil has asked for compensation from the EU for the economical loss. This is going to mean the EU will be repaying Brazil for their lost profits, whether it is in currency or trade we do not know. However, I do not know if the EU is going to be willing to pay compensation or if they would rather forgo the law entirely, which is up in the air as of right now. But if the EUDR is passed and enforced, Brazil will lose one-third of their profits and go into economic decline. That means the cost will be passed onto other trade partners of Brazil such as the United States, China and Argentina , which may also cause tensions between those countries and the EU.
This article relates to what is going on in class because it talks about economics in a country and trading relations between two or more countries. We’ve learned in class that for a nation to become a state/country they would need to have some form of exports or income, whether it be goods or services to support their economy. Brazil’s main export happens to be products that are related to deforestation and will be restricted with the addition of the EUDR. The article also mentions inter-governmental organizations (IGOs). The EU is a political IGO which includes many countries in Europe and like other IGOs it has rules and regulations for the members, meaning that those countries will have to abide by the new law as well.