China and Brazil have a joint commitment to end illegal deforestation driven by trade. What does this mean for major importers like the EU, UK, and US?

Forests Apr 21, 2023
Kerstin Canby, Genevieve Bennett and Verena Manolis

The EU’s new Deforestation Regulation (EUDR), which prevents products linked to deforestation from entering the EU market, was just formally approved by the European Parliament on Wednesday. China and Brazil also recently unveiled their own collaborative effort in a new joint statement, emphasizing a shared commitment to eliminate illegal deforestation and prevent the illegal trade of commodities linked to forest loss. Genevieve Bennett, Director of Communications and Strategic Outreach, sits down with Kerstin Canby, Senior Director of our Forest Policy, Trade, and Finance Initiative, to discuss what this new agreement means for Brazil and China; for other major import countries like the EU, UK, and US; and for Forest Trends’ own strategy.

Genevieve Bennett:

In the past few years, we’ve seen major governments and consumer markets around the world step up with stricter regulatory approaches to combat deforestation. Now, it looks like China and Brazil will be joining their ranks.

The leadership on deforestation we’re seeing in the Global South feels encouraging, especially when we look at it alongside recent regulations by other large importers, such as the EU, UK, and US. What’s the potential for China and Brazil’s new commitment, and how does it compare with existing approaches?

Kerstin Canby:

Implementation is going to be key here. Sharing satellite data and forming Subcommittees on Environment and Climate Change is a good start. The joint statement has a lot of promise, and our team will be watching closely to see how it plays out in practice.

Kerstin Canby

For China, this new commitment with Brazil is exciting. An effective way for them to make good on their latest commitment is to implement Article 56 of their Forest Law, a 2019 revision that aims to safeguard forests and improve timber governance. They could even expand import regulations for forest-risk agricultural commodities that are driving illegal deforestation. We have data showing that commercial agriculture drives two-thirds of deforestation worldwide, and that at least 69 percent of the land cleared for agriculture is illegal (and as high as 95 percent in Brazil). Looking at import regulations for Brazil in particular, soy should be a key focus; it’s one of the “big five” forest-risk commodities, and China is the largest importer of Brazilian soybeans. Seventy percent of Brazil’s soy went to China in 2018, for example. With the extent of illegality risk present in the Brazil-China trade flow, and if implemented, this kind of trade regulation has potential to make a huge difference in eliminating deforestation.

China and Brazil’s proposed strategy also aligns closely with the UK Environment Act and the draft FOREST Act in the US Congress. These laws are grounded in a legality standard – only products stemming from illegally harvested sources are banned, compared with the new EUDR, which bans all deforestation from supply chains, legal or not. China and Brazil are focused specifically on preventing illegal logging and trade.

Genevieve Bennett:

Genevieve Bennett

Could you speak a bit more on a legality approach versus a zero-deforestation approach? There’s much more overlap here than people might think.

Kerstin Canby:

Correct. It’s not “either/or,” like many people often fear. To truly eliminate deforestation as fast as possible, demand-side measures to ensure legality can be a steppingstone and thus a faster path for tropical countries to get to zero deforestation.

First, to state plainly, Forest Trends fully supports the objective of zero-deforestation agricultural commodity production. We must, however, make a distinction between the objective of reducing agro-conversion to zero and the specific strategies we pursue to achieve this objective. Actions to reduce agro-conversion do not take place in a vacuum: a web of relevant actors are each located within their own social, political, historical, legal, and economic contexts, with different obligations and capacities to act. The relative importance of maintaining forests, as opposed to pursuing alternative uses for forest land, such as agricultural production, will legitimately vary among these actors as they define and pursue land-use objectives, including food and commodity production. As such, the criteria applied by commodity purchasers, and those regulating their trade, may need to vary as well. In setting out to make recommendations to these various actors, with the ultimate objective of eliminating all commercial agro-conversion, we must take into account these differences.

We believe that the most rapid, equitable, and successful path to achieving stable and sustainable zero-deforestation global land use requires careful consideration of who should set the criteria for ethical land use within their sphere of control or influence, potentially even including some agro-conversion. Eliminating products of illegal deforestation best supports the development of sound institutions that are capable of responding to the needs of markets, while addressing the climate crisis head-on.

Let’s think about it in terms of a cocoa supply chain, for example, with cocoa sourced in Ghana and exported to the US. The combined approach we’re advocating for would say no to any cocoa illegally produced in Ghana. This creates a “legality-based floor” and forces any laggards to up their supply chain to at least meet the requirements of Ghana’s own laws and regulations, while letting the producers, farmers, communities, and local governments steer their own development course on their own terms. Now that the floor is raised, manufacturers, traders, retailers, and other consumers in the US can gradually aim even higher with zero-deforestation commitments, all while supporting capacity-building and technical assistance for forest countries towards zero-deforestation. This strategy squeezes out illegal deforestation, increases supply chain transparency, and initiates a major, systemic shift towards eliminating deforestation across global supply chains.

Specifically for China and Brazil, this new joint agreement is a critical first step in tackling legality issues, and it could help them comply with the increasing number of legality and zero-deforestation commitments and regulations coming into play.

Genevieve Bennett:

Shifting a bit closer to home, I can’t help but think about the FOREST Act introduced in the US in 2021. Do you think these new actions by the EU, UK, and now China and Brazil, could be the push US policymakers need to put some action behind this legislation?

Kerstin Canby:

I’m hopeful, yes. The FOREST Act emphasizes legality, just like the UK, Brazil, and China are. It would ban the import of agricultural commodities produced on illegally deforested land from entering the US market and ensure companies are maintaining a robust traceability system. There is so much momentum now to act on illegal deforestation and my hope is that policymakers take advantage of it.

I also think about the similarities between this new China-Brazil agreement, and a similar one made between China and the US in 2021 that came out of the Glasgow COP. As part of a Joint Declaration on Enhancing Climate Action in the 2020s, both countries emphasized the role deforestation plays in the climate crisis and pledged to collaborate in eliminating global illegal deforestation by banning illegal imports.

Although US-China relations are currently a bit rocky, I see an opportunity for a three-way commitment towards eliminating illegal deforestation between China, the US, and Brazil. It’s clear all three countries have a shared goal. You’ll even remember Presidents Biden and Lula meeting back in February to discuss a collaborative climate agenda between the US and Brazil. Maybe this won’t happen right away, but I see potential down the line.

Genevieve Bennett:

Your team has spent almost ten years now working in China, giving you a good sense of the landscape there. Can you give a little background on some of the work you’ve done in China?

Kerstin Canby:

When we started our work in China, prices for timber were five to six percent below what they should have been if there was no illegal timber on the global markets. A lot of that was going through China. We were exploring the impact of China’s supply chain on the environment and the industry, and our work focused on demand side measures (who’s buying, the impacts of non-good buyers like China). That’s where we got started in our work on legal, sustainable goods.

In international fora, governments like Brazil and China also were resistant to use the phrase “illegal logging.” We supported the World Bank in a series of regional ministerial conferences starting in Southeast Asia, and then in Africa, Russia, Eastern Europe, and North Asia, including China. At these conferences, leaders would unanimously, yet anonymously, admit to the crisis caused by illegal logging and commit to combating the problem. Even though the nature of these conferences seemed vague, having those ministerial commitments enabled the World Bank, the ITTO, and the US government to start talking about this issue, put these commitments into their work programs, and to get the required funding. These conferences opened up the discussion on illegal logging.

Since then, we’ve had our ups and downs. A major win was China’s introduction of Article 56 into their Forest Law in 2019. On the flip side, we see China struggle to effectively implement their forest laws, Article 56 included.

Genevieve Bennett:

This is such a large and complicated system your team is trying to shift, and I am always very struck by your program’s way of working: you build these relationships over a long period of time and really become the go-to person behind the scenes for data, advice, and guidance. Where do you see the current momentum taking us next? And how does your strategy fit into this?

Kerstin Canby:

In our work, patience is key. We are continuously working hard behind the scenes. This new collaboration between China and Brazil is a wonderful first step, and one that we’ll be sure to take advantage of. It would be great to get India and Vietnam on board too. India is a major importer of Myanmar timber, with 23 percent of reported trade from Myanmar going to India last year. Much of this is suspected to be illegal.

In Vietnam, we’re seeing an increased concern about reputations from the Vietnamese industries. We’ve found Vietnam’s industry and government players to be more nimble, flexible, and reactive to issues concerning illegal logging and, increasingly, deforestation caused by agricultural production of rubber and sugar. The hope is that they could jump on an opportunity like this and enact trade regulations to match.

Going forward, our team’s strategy has been, and continues to be, to put in place a team of practical people behind the scenes, to have a good network, and to know who the key players are. I call it the “golden cellphone.” We have people who know who to call, when to call them, and how and when to help. This enables us to create impactful and measurable results as soon as a window of opportunity appears, just like we’re seeing now.

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