This article is part of a Synergies series on reviving multilateralism curated by TESS titled From Vision to Action on Trade and Sustainability at the WTO. Any views and opinions expressed are those of the author(s) and do not necessarily reflect those of TESS or any of its partner organizations or funders.

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The 2023 UN Climate Change Conference (COP28) reinforced the role of nature in combating climate change by noting the need to enhance support and investment to halt and reverse deforestation and forest degradation by 2030. This builds on one of the targets that was delivered as part of the Kunming-Montreal Global Biodiversity Framework at COP15 of the Convention on Biological Diversity (CBD) in December 2022, previous UN climate change conferences, and other key moments like the New York Declaration on Forests in 2014.

Deforestation resulting from international trade-related activities accelerates biodiversity loss and is estimated to account for approximately one-third of deforestation-related emissions. Agricultural expansion stands out as the primary driver, particularly in tropical regions. Seven commodities—cattle, oil palm, soy, cocoa, rubber, coffee, and plantation wood fibre— significantly contribute to forest loss. Several multilateral environmental agreements and bilateral trade deals support efforts to address deforestation, especially by reducing illegal logging through law enforcement and monitoring. Recent EU trade deals with Kenya and New Zealand specifically mention deforestation-free supply chains.

In view of the increasing impact of trade on nature, along with growing calls for the World Trade Organization (WTO) to take more decisive sustainability action, a crucial question emerges: should the multilateral trading system assume a larger role in ensuring the sustainability of supply chains? Or, as James Bacchus proposes, should we consider negotiating new multilateral trade rules to help protect the world’s forests?

Some WTO members have started adopting due diligence laws to ensure their supply chains are free of products linked to deforestation and forest degradation. The EU Regulation on Deforestation-free Products (EUDR) sets a precedent in this regard, while the UK Environment Act and the US Forest Act pursue similar objectives. More countries may follow suit to promote the sustainable production and consumption of forest-risk commodities.

WTO rules allow countries to use trade measures to restrict imports of products linked to deforestation. The United Nations Framework Convention on Climate Change (UNFCCC) also recognizes that parties can take unilateral response measures. However, such measures must be based on scientific evidence and not be used as a means of arbitrary discrimination or a disguised restriction on international trade (Article 3.5). Brazil and Indonesia and some Latin American developing countries have raised concerns that the EUDR may be protectionist and discriminatory. It could also trigger retaliatory responses, such as banning affected exports to implementing countries.

Restricting trade in timber and wood products in violation of national laws, particularly illegal lumber, is prudent to address deforestation. However, emerging measures will regulate market access for specific products and their entire supply chains based on an indirect variable related to these exports: the risk of deforestation in the country of origin. This approach may pose challenges to fundamental WTO rules and impose burdensome reporting and traceability requirements.

It is commendable that certain WTO members now recognize the impact of their consumption on deforestation abroad while simultaneously offshoring their carbon footprints. Nonetheless, imposing unilateral measures that could unfairly penalize developing and least developed countries—particularly their micro, small, and medium-sized enterprises (MSMEs), smallholder farmers, and forest communities—may not represent the optimal path forward. Greater multilateral cooperation and dialogue between producing and consuming countries may offer more effective solutions and better trade, environmental, and sustainable development outcomes.

Some may argue that WTO councils and committees, notably the Committee on Trade and Environment (CTE), already facilitate reporting and transparency on trade-related climate measures. However, given that trade may incentivize deforestation and that emerging supply chain measures could potentially distort trade, there may be a compelling argument for re-examining the WTO’s role and urging bolder action.

Interested WTO members could consider launching an open-ended informal dialogue on trade and environmentally sustainable forests and agricultural commodities, which could complement the work of the CTE. This dialogue would explore how enhanced trade cooperation, within the rules and mechanisms of the WTO, could effectively contribute to addressing deforestation linked to global agricultural supply chains.

The involvement of the EU, having adopted the EUDR, along with Indonesia and Brazil as major affected producers, would enhance the political weight and credibility of this process and its outcomes. Indonesia, alongside the UK, co-chairs the Forest, Agriculture & Commodity Trade (FACT) Dialogue, launched during COP26. Brazil’s hosting of the G20 in 2024 and its presidency of COP30 in 2025, scheduled to be held in the Amazonian city of Belem, offer significant opportunities to underscore the critical role of tropical forests in trade, climate, and nature discussions. This also presents a unique chance to foster linkages among deliberations within the G20, WTO, and UNFCCC.

Furthermore, an informal dialogue should prioritize the voices of smaller WTO members affected by such unilateral measures, especially commodity-dependent developing and least developed countries. Their involvement would contribute crucial perspectives, especially regarding just transitions and a fair allocation of the burden of change. For instance, the African Group has articulated principles to guide the development and implementation of trade-related environmental measures. This could be examined within the context of how zero-deforestation measures impact the continent’s exports and regional value chain development under the African Continental Free Trade Area.

Possible discussion topics of an informal dialogue at the WTO could include, among others:

• Exchanging knowledge and policy experiences and assessing their effects in consuming and producing countries, particularly in least developed countries, and for small farmers and businesses.
• Clarifying legal matters and defining “forest” biomes and “deforestation” for trade-related purposes, and exploring benchmarking measures.
• Promoting best practices (such as the EFTA-Indonesia Comprehensive Economic and Partnership Agreement, which links preferential palm oil market access to certified sustainable production methods).
• Exploring opportunities for procurement preferences for zero-deforestation products.
• Assessing capacity and technical support needs for compliance and traceability.
• Fostering collaboration with other international processes, such as the UN Forum on Forests, UN Environment Assembly, UNFCCC, and CBD.

At a more ambitious level, the informal dialogue could consider developing a set of regulatory principles for appropriately designing and implementing zero-deforestation supply chain measures. This framework could draw upon innovative provisions in recent trade deals and voluntary sustainability standards. Given the significant role of developing and least developed countries as producers of forest-risk commodities, such a framework should recognize their national circumstances and priorities and provide special and differential treatment, especially for least developed countries. It should also reflect international legal principles like common but differentiated responsibilities and respective capabilities, even if the latter lies outside the scope of WTO agreements. More targeted aid for trade would support compliance with due diligence requirements, particularly for MSMEs in developing countries.

Addressing the intricate interplay between trade and deforestation requires more collaborative efforts within multilateral frameworks like the WTO. An informal dialogue on trade and environmentally sustainable forests and agricultural commodities could help advance better understanding and find common ground on trade and sustainability objectives.

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Brendan Vickers is Head of International Trade Policy at the Commonwealth Secretariat in London. Any views expressed are those of the author and do not necessarily represent those of the Commonwealth Secretariat.

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Synergies by TESS is a blog dedicated to promoting inclusive policy dialogue at the intersection of trade, environment, and sustainable development, drawing on perspectives from a range of experts from around the globe. The editor is Fabrice Lehmann.

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