February 27, 2026
10:00 am - CET
Online
EU-Mercosur Agreement: Implementing New Sustainability Rules to Support Forest Protection, Bioeconomy and Resilient Value Chains
February 27, 2026
Climate & Company and the German Institute for International and Security Affairs (SWP) co-hosted a closed-door expert webinar on the implementation of the new sustainability provisions of the EU-Mercosur trade agreement. Around 35 participants from academia, policy and civil society joined the 90-minute session under the Chatham House Rule.
While the current debate around the EU-Mercosur agreement is dominated by questions of legal review, ratification and timelines, our event shifted focus to the next frontier: how the agreement’s new sustainability rules can be put into practice, and how to start preparing now. Central to the discussion was Annex 18.a to the new TSD (Trade and Sustainable Development) Chapter, which introduces an incentive-based mechanism for products that contribute to forest conservation and sustainable use (Paragraph 39), as well as a broader framework for socially and ecologically sound goods and services for both trading sides (Paragraph 40).
Expert inputs
The session was opened and moderated by Bettina Rudloff (SWP) and Elisabeth Hoch (Climate & Company). Four experts provided very relevant inputs:
- Rupert Schlegelmilch (former European Commission, Chief Negotiator EU-Mercosur): Expectations for the sustainability chapter and its implementation
- Benno Pokorny (University of Freiburg): Bioeconomy production in Brazil – real opportunities and challenges
- Janine Pelikan (Thünen Institute): Additional market access for forest-protective products: which products, what impact?
- Ingmar Juergens (Climate & Company): EU environmental legislation, transparency and data – an opportunity for transparent, sustainable and resilient value chains
Key discussion points
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The TSD (Trade and Sustainable Development) chapter, and specifically Annex 18.a, represents a significant political achievement and departure from the usual trade agreement template. Rather than focusing on production standards the chapter takes a more pragmatic approach centred on products and incentives, especially for the large farmer communities in Mercosur.
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The chapter’s value lies in its inclusivity: it explicitly names smallholders, women, IPLCs, and the roughly 27 million people living distant from urban centres as groups that should benefit from the agreement, not just large agricultural actors.
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The chapter creates a concrete work mandate, including the establishment of a product list within one year of entry into force, and a sub-committee to oversee implementation.
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Participants drew a distinction between three broad categories of bioeconomy products: large-scale biomass commodities (limited potential for positive forest and social outcomes); innovative products (high start-up energy, but quickly captured by large corporates); and socio-bioeconomy products, goods originating from the forest itself, such as Brazil nuts, rubber, and plant oils. Even within this last category, rising demand often triggers intensified cultivation outside the forest, undermining intended benefits.
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Product definition alone will not deliver results: business models and fair trading relationships with IPLC as distinctive actor groups matter as much, as well as distinguishing between large industrial producers, smallholders, and forest-based communities, as their roles, needs, and leverage points differ significantly.
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Paragraph 39, was identified as an opportunity and a potential risk for EU agri-food. While sensitive goods are generally well protected under the agreement, this issue still requires careful further analysis from an EU perspective. However, the expectations for significant changes in trade flows as a result of the sustainability provisions were rather limited.
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On data and transparency, participants stressed that existing EU frameworks on due diligence and disclosure can serve as a foundation for credible sustainability monitoring, and that data on unsustainable supply chains is at least as important as data on sustainable ones, supporting companies in strenthening the resilience of their value chains. Data and verification modalities were stressed as potential areas for new business development for scope 3 actors and data named as a key bioeconomy product.
Conclusions
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The EU-Mercosur agreement provides a valuable cooperative framework, at a moment when building trust and alliances across the globe matters more than ever. Transparency, mutual understanding, and thinking in whole value chains, for both sides of the agreement, are essential foundations for making it work.
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Concrectely we need to demonstrate what works in practice, being creative and differentiated in the design of incentives (beyond tariffs alone), and to engage all relevant actors along supply chains.
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Implementation preparation must begin now. If provisional application of the agreement moves faster than expected, those who have not prepared risk being overtaken by events. Starting early, even with pilots and small steps, is far preferable to act later under time pressure.
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