Arquivos United States - Murray Advogados

Government opened public consultation on most effective ways to limit or remove commodities linked to deforestation from supply chains

10/21/2022

Soybean plantation in Pará: crop may be affected in case of restriction in the U.S. — Foto: Claudio Belli/Valor

The United States government has taken a new step to define trade restrictions aimed at prohibiting commodities coming from deforested areas as of December 2020, following the example of what the European Union is preparing. The measure may impact 10% of Brazilian exports to the American market.

The State Department, in conjunction with Customs and Border Protection, the Office of the United States Trade Representative (USTR), and other government agencies, opened this week public consultation to receive input on the most effective ways to limit or remove commodities linked to deforestation from supply chains, and to encourage the procurement of sustainably produced agricultural commodities.

One question submitted by the U.S. government in the public consultation is whether all “soft commodities” should be covered by trade restrictions, or just some, citing beef, soybeans, coffee, palm oil, cocoa, pulp, and rubber, which would account for three-fifths of deforestation globally.

The value of trade referring to these products in the public consultation exceeds $3 billion in Brazilian exports to the U.S. (data for 2021), equivalent to about 10% of Brazilian exports to the U.S. market, according to a preliminary impact analysis made by lawyer Rodrigo Pupo, with MPA Trade Law.

Currently there is already a bill going through the U.S. Senate to establish due diligence on legal and illegal deforestation in supply chains for certain commodities.

“The difference with this legislative proposal is that it does not include coffee, which is now in the public consultation, but includes coffee products, which increases uncertainty about the measure and certainly the trade impact,” said Mr. Pupo.

Washington will receive opinions from different interested parts by December 2. Then government agencies will prepare a report for President Joe Biden outlining options for trade restrictions. The USTR must identify foreign countries without adequate and effective protection against deforestation caused by the production of commodities that are likely to enter the United States, and point out the potential risk of each country identified.

There are several other bills introduced in Congress involving environmental policies globally that may affect bilateral relations. One of them directs the Secretary of State to engage with Brazil on environmental enforcement, sustainable development, and emission reduction efforts.

In a recent report on national security strategy, the Biden administration included the goal of mobilizing funding and other forms of support to promote conservation of the Amazon rainforest.

The European Union is well ahead in its plan to ban imports of agricultural commodities linked to deforestation. The goal in Brussels is for the final text of the future regulation to be agreed upon by the European Commission (the EU’s executive arm), the European Council (of European leaders), and the European Parliament before the COP27, which will take place in November in Egypt.

The European regulation will ban the use of several “high forest risk commodities.” The European Parliament’s specific proposal corresponds to 80% of Brazilian agribusiness exports or 40% of total exports to the EU, adding up to $14.5 billion in sales to the bloc in 2021.

*By Assis Moreira — Geneva

Source: Valor International

https://valorinternational.globo.com/

Lithium, cobalt, and niobium are essential for many modern technologies — and the country has plenty of them

09/20/2022

Niobium: Brasília believes that country has essential stocks of strategic commodities and can supply companies of different origins — Foto: Reprodução

The United States has signaled to Brazil its interest in having preferential access to the Brazilian production of critical minerals amid growing rivalry with China, as it seeks to reduce dependence on strategic commodities.

Valor has learned that in meetings held in Washington in August, Brazilian representatives replied that the United States is welcome — including to make a difference in investments in this sector — but Brazil does not intend to grant privilege to partners.

The view in Brasília is that the country has essential stocks and can accommodate the presence of companies of different origins. While the U.S. talk about having preference, Brazilians reply that the government seeks to improve the business environment and equal competition conditions.

This message was given by diplomats and also by the Minister of Mines and Energy, Adolfo Sachsida, last month in Washington, sources say.

Critical minerals such as rare earth elements, lithium, cobalt, and niobium are essential for many modern technologies and for national and economic security. They are found in products from computers to home appliances. And they are key inputs in clean energy technologies such as batteries, electric vehicles, wind turbines, and solar panels.

A study by the European Union (EU) points to Brazil as the world’s largest producer of niobium — 92% of all. The product is used for high-technology applications (capacitors and supercomputers, among others). In addition, the country produces 13% of the world’s bauxite for aluminum production; 8% of natural graphite, used for batteries and material for steel production; and 9% of the world’s tantalum, which is used for superalloys and compensators for electronic devices, for example.

During the Trump administration, the U.S. defined a list of 35 ores considered critical to economic and national security. This year, the Biden administration took action to increase U.S. production.

A White House statement notes that as the world moves into a clean energy economy, global demand for those critical minerals is expected to skyrocket between 400% and 600% in the coming decades. For minerals such as lithium and graphite used in electric vehicle batteries, demand will increase even more — by about 4,000%.

The U.S. is increasingly dependent on foreign sources for many of the processed versions of those minerals, according to the White House. Globally, China controls most of the processing and refining market.

Last week, the European Union announced that it will make a Critical Raw Materials Act to build up “strategic reserves” and gain autonomy. European Commission President Ursula von der Leyen pointed out that lithium and rare earths “will soon be even more important than oil and gas.”

The only problem, Ms. Von der Leyen said, is that “one country dominates the processing” — that is, China. “We have to avoid falling into the same dependency as with oil and gas,” she said, adding that the EU seeks new partners to help strengthen the European economy and promote “our values.”

In the same meetings in Washington, Brazilian representatives insisted that the U.S. remove barriers to the entry of steel from the country into the U.S. market. The response was that, for the time being, this will not happen, especially in view of the U.S. legislative elections in November.

The Brazilian diplomacy replied that, at the same time, the U.S. imported from China and, before, from Russia. For these sources, the U.S. needs to have a clearer vision of what it wants in relation to Brazil and Latin America.

*By Assis Moreira — Geneva

Source: Valor International

https://valorinternational.globo.com/

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