- The Energy Mix - https://www.theenergymix.com -

Brazil’s Amazon Destruction Puts World’s Biggest Trade Deal at Risk

A year after it was finalized, a massive free trade deal between the European Union and Mercosur, a South American trade bloc comprising Brazil, Argentina, Uruguay, and Paraguay, is in peril, as stakeholders recoil from Brazilian President Jair Bolsonaro’s transparent willingness to lay waste to the Amazon.

Among those most fiercely opposed to going forward with the agreement is French President Emmanuel Macron, writes Mongabay News. In a crystal-clear rebuke of Bolsonaro and his government, Macron formally suspended his country’s participation in the negotiations at the end of June, saying his country will not make “any trade agreement with countries that do not respect the Paris Agreement.” He also called for “the creation of the crime of ecocide,” with the International Criminal Court serving as judge.

  • Be among the first to read The Energy Mix Weekender
  • A brand new weekly digest containing exclusive and essential climate stories from around the world.
  • The Weekender:The climate news you need.

Enduring “14 straight months of deforestation since Bolsonaro took office,” Brazil’s rainforest is being razed 83% faster than this time last year, reaching levels of destruction “not seen since 2008,” adds Mongabay.

Austria, Belgium, Ireland, Luxembourg, and the Netherlands, along with dozens of individual European parliamentarians, have all formally echoed Macron’s excoriation of Bolsonaro’s failure to protect the Amazon, and “Client Earth and the International Federation of Human Rights (FIDH), among other non-profit entities, filed a formal complaint with the European Commission for the treaty to be suspended.” Condemning Bolsonaro’s track record on both environmental and human rights, the organizations explicitly argue that the deal “will worsen environmental destruction and the climate crisis with the dramatic expansion of commodities monocultures, including soy production, in the Amazon forest.”

Such opposition is chilling business leaders on both sides of the Atlantic, who had likely been eagerly awaiting a deal that would “create an open market encompassing 780 million people with a Gross Domestic Product (GDP) of US$19 trillion between the two blocs.”

The pact would be “of great value to both parties,” explains Mongabay. “EU countries will see most export tariffs to Mercosur eliminated, including for automobiles and chemicals, while the South American bloc…will win exemption from import taxes on 81.7% of agricultural products.”

The Bolsonaro government, meanwhile, did not make a single reference to deforestation in its latest strategic plan for its Ministry of Agriculture—an absence that has dumfounded critics. “More than 95% of the deforested areas in Brazil are occupied by agricultural activities,” said Tasso Azevedo, a forest engineer and coordinator of the non-profit Climate Observatory’s Greenhouse Gas Emission Estimation System.Agriculture is thus responsible for, or the direct beneficiary of, deforestation.”

Ratifying the agreement in any way “will require complex maneuvering and concessions,” writes Bloomberg Green. The extent to which the pact finds success will depend on the (dwindling) health of Brazil’s rainforest, and “the whole deal could all go up in smoke if this year’s Amazon fires in August and September greatly surpass those of 2019.”

Bloomberg adds that 29 investment funds around the globe—totalling some US$3.7 trillion in assets—are urging Brazil to stop underwriting deforestation, violating the rights of Indigenous peoples, and passing public lands into private hands. Citing the recent decision of Storebrand ASA, a heavyweight Norwegian investment firm, to include political instability and climate/ecological neglect in its risk calculations, Bloomberg describes the investor warning as “the latest sign that big institutional funds will no longer tolerate conduct that flies in the face of environmental, social, and governance standards.”

There is increasing disquiet within Brazil’s own business sector, as well: Reuters reports that 39 companies, including the Itau Unibanco bank, mining interest Vale, and state-owned utility Eletrobras issued a joint statement condemning Bolsonaro’s failure to protect the Amazon from deforestation. “Regional or Brazil chiefs for international companies also signed on, including oil firm Shell, Microsoft, agrochemical maker Bayer, and commodities trader Cargill,” the news agency adds.

The opinion that Brazil should be taking a different approach to its rainforests—that is, preserving them as a carbon sink—has been shared by none other than Walter Schalka, CEO of Brazil’s Suzano SA, the world’s biggest wood pulp producer. In an interview with Bloomberg Green, Schalka urged his country to recognize that “an incredible opportunity in the green carbon market” lies in Brazil cutting its Amazon deforestation and burning to zero. 

“It’s not a loan, or investment,” he said of the $10 billion the country could earn from such a move. “It would be profit from carbon credit sales.”