EUDR + iTA: the dual regulatory challenge for importers of Brazilian products

EUDR + iTA: The Dual Regulatory Challenge for Importers of Brazilian Products\n\n### Introduction: The Convergence of Two Regulatory Worlds\n\nThe year 2026 marks a turning point for European importers of Brazilian products. Not only must they navigate the new opportunities and complexities of the EU-MERCOSUR interim Trade Agreement (iTA), but they are also faced with the full entry into force of the European Union\'s Deforestation Regulation (EUDR). This convergence creates an unprecedented dual regulatory challenge. On the one hand, a trade agreement that lowers customs duties and aims to streamline trade. On the other, a demanding environmental regulation that imposes strict due diligence obligations to ensure that imported products have not contributed to deforestation. For importers of the seven affected commodities (soy, beef, coffee, cocoa, wood, rubber, and palm oil), the synergy of these two texts is a source of headaches, but also an opportunity to build more sustainable and resilient supply chains. This article deciphers this dual challenge and proposes a practical compliance strategy.\n\n### The Paradox: Facilitating Trade, Strengthening Controls\n\nAt first glance, the iTA and the EUDR seem to pursue contradictory objectives. The iTA, by reducing tariffs by 10% to 50% on many Brazilian agricultural products, aims to boost imports. For example, duties on Brazilian green coffee (unroasted) went from 7.5% to 0% on the first day of the agreement. Simultaneously, the EUDR requires the same coffee importers to prove, via precise geolocation data, that the cultivation plot was not deforested after December 31, 2020. This is the heart of the paradox: how to import more, faster, and cheaper, while exercising stricter and more detailed control over the origin of products?\n\nThe reality is that these two regulations are two sides of the same coin: the EU\'s new trade policy, which inextricably links market access to compliance with sustainability standards. Companies that fail to master this dual constraint will simply be excluded from the market, with the tariff benefits of the iTA becoming inaccessible if EUDR compliance is not ensured.\n\n### The 7 Commodities Under High Surveillance\n\nThe EUDR focuses on seven raw materials and their derived products, for which Brazil is a major supplier to the EU:\n\n1. **Soy**: Brazil is the EU\'s largest supplier of soy. Importers must now trace each batch back to the cultivation plot.\n2. **Beef**: Brazil is a leading beef exporter. Traceability is complex due to the multiple stages of breeding.\n3. **Coffee**: The EU imports more than 800,000 tons of Brazilian coffee per year. The sector is highly fragmented, with millions of small producers.\n4. **Cocoa**: Essential for the European chocolate industry.\n5. **Wood**: Traceability is already partially covered by the EU Timber Regulation (EUTR), but the EUDR strengthens the requirements.\n6. **Rubber**: A key industrial product.\n7. **Palm Oil**: Although Indonesia and Malaysia are the main suppliers, imports from Brazil are affected.\n\nFor each of these products, the importer (the "operator" in the sense of the EUDR) must submit a "due diligence statement" via a central EU information system before the goods can be cleared through customs. Without this statement, no importation is possible.\n\n### Practical 4-Step Compliance Strategy\n\nNavigating this dual challenge requires a systematic approach. Here is a four-step strategy for importers:\n\n**Step 1: Supply Chain Mapping and Data Collection**\n\nThe first and most crucial step is to know your supply chain precisely. It is no longer just a matter of knowing who your direct supplier is, but of tracing back to the production plot. This involves:\n\n* Requiring suppliers to provide the geolocation coordinates (polygons) of all plots from which the raw materials originate.\n* Implementing flow segregation systems to ensure that a batch of "EUDR-compliant" coffee is not mixed with a non-traceable batch.\n* Using technologies like blockchain or dedicated traceability platforms to securely record and share this information.\n\n**Step 2: Deforestation Risk Assessment**\n\nOnce the geolocation data is obtained, the importer must cross-reference it with satellite data and information on the country of origin to assess the risk of non-compliance. The European Commission\'s "benchmarking" system, which will classify countries (or regions) as low, standard, or high risk, will be a key tool. For Brazil, it is likely that certain regions like the Amazon will be classified as high risk, which will entail enhanced due diligence obligations.\n\n**Step 3: Risk Mitigation**\n\nIf a risk is identified (for example, a plot is located in an area with a high rate of deforestation), the operator must take measures to mitigate it. This may include:\n\n* Requesting independent on-the-ground audits.\n* Implementing capacity-building programs with small producers to help them comply.\n* As a last resort, excluding non-compliant suppliers from the supply chain.\n\n**Step 4: Documentation and Declaration**\n\nThis entire process must be rigorously documented. This documentation will serve as the basis for drafting the due diligence statement to be submitted to the authorities. It is essential to keep these records for at least 5 years, as ex-post checks will be carried out by the competent authorities of the Member States.\n\n### Costs and Implications\n\nThe cost of complying with the EUDR is not insignificant. Estimates vary, but an increase in costs of 5% to 15% is expected for the affected raw materials, depending on the complexity of the supply chain. These costs include technological investments, audits, training, and human resources dedicated to compliance.\n\n> A coffee importer in Trieste told us: "The savings we make from the removal of customs duties with the iTA are almost entirely absorbed by the costs of complying with the EUDR. Brazilian coffee is not cheaper, but it is (hopefully) more sustainable. It\'s a complete change of business model."\n\n### Conclusion: Towards a Trade of Proof\n\nThe dual challenge of EUDR + iTA marks the end of the era of trade based on trust and the beginning of the era of trade based on proof. For European importers, it is no longer enough to buy a product; you have to buy a product and the proof of its compliance. This is a constraint, but also an opportunity. Companies that master this new situation will not only be able to secure their market access, but also to promote their approach to consumers, who are increasingly sensitive to sustainability issues. The iTA opens the door, but the EUDR provides the key. Without the key, the door will remain closed, even if customs duties are zero.