Does trade cause deforestation?

A 2010 World Trade Organisation report found that trade liberalisation increases deforestation, which is responsible for roughly 12 per cent of global CO2 emissions. Another recent study showed that between 2000 and 2011 the production of beef, soy, palm oil and wood products in just seven countries was responsible for 3.8 million hectares of forest loss annually, leading to 1.6 billion tons of CO2 emissions per year. Also mentionable is this Harvard study which revealed that trade and growth can exacerbate environmental degradation (particularly CO2 emissions), or this 2016 report showing that opening specific areas of the Amazon to international trade increased deforestation.

Transport also plays a key role in trade flows and hence in deforestation. Transport investments close to or in forested areas close increase deforestation significantly, especially when they contribute to reducing transport costs.

Last, decreased deforestation in one country can easily lead to increased deforestation in another. It has been estimated that between nine and forty two per cent of reductions in forest products in one country will be offset by increases in another country. For example, there are clear indications that the reduction in deforestation in Brazil from 2005 onwards, thanks to stringent national policies, may have simply leaked over into neighbouring countries such as Paraguay and Peru. This is something that needs to be addressed specifically with regional trade agreements.

European Union (EU) trade is an important factor in driving deforestation, notably through its demand for commodities, including for livestock and dairy production. Although the (EU) is committed to act to halt global deforestation and mitigate climate change, it cannot expect to achieve this while continuing to contribute to the problem through its consumption of and trade in commodities driving deforestation.

The EU can and should use Free Trade Agreements to promote international environmental and social commitments. To do so, the EU must ensure that the trade agreements it negotiates with highly forested countries – such as Indonesia, Malaysia and the Philippines – include provisions and enforcement mechanisms that ensure that an increase in trade does not increase deforestation and respect human rights, including community tenure rights.

For more information, read:

• Fern’s report on forests and forest people in EU Free Trade Agreements
• This blog from our forest and trade campaigner answering the head of the WTO who says trade does not impact the environment 
• Fern’s commodities briefings on Soy, Palm Oil, Cocoa, Beef & Rubber.