26/03/2026

The Green Trap: Regulatory Rollbacks in Argentina’s Forest Law Risk Restricting Access to European Markets

The recent Association Agreement between the European Union and Mercosur seeks to establish a free trade area by eliminating tariff and non-tariff barriers. In parallel, the EU has advanced its Green Deal, a plan to achieve climate neutrality by 2050. At the center of this strategy lies Regulation (EU) 2023/1115—known as the EUDR—which prohibits the commercialization in the European market of key commodities—soy, beef, timber, among others—unless they are “deforestation-free” after December 31, 2020.[1]

The regulation does not merely require that production be legal in the country of origin. This is its most disruptive feature: even if a sovereign state legally authorizes deforestation, the EU may still classify the product as “linked to deforestation” and block it at the border. Local legality is therefore a necessary but insufficient condition.¹

How the mechanism works and when it enters into force

The EUDR operates on three pillars. First, each product must be deforestation-free after 2020. Second, it must comply with the legislation of the country of origin. Third, it must be supported by a due diligence statement including precise geolocation coordinates—polygon-based—of all plots involved in the supply chain.[2]

The European Commission will classify countries into three risk levels: low, standard, or high. This classification determines the level of documentary requirements exporters will face, directly impacting transaction costs. A low-risk country benefits from simplified procedures; a high-risk country may see its exports blocked at EU borders until compliance is demonstrated.

The regulation entered into force on June 29, 2023, although its mandatory application has been postponed. The new deadline is December 30, 2026 for large operators and traders, and June 30, 2027 for micro and small enterprises. The transition period is being used to develop a centralized digital platform, finalize risk classifications, and publish technical guidelines. Time is running.

What exporting countries must do—and what Argentina has yet to resolve

To influence risk classification, exporting countries must provide evidence of sustainability commitments: national legislation with effective sanctions against deforestation, frameworks protecting local communities and Indigenous peoples, and monitoring systems with verifiable indicators.

This requires coordination between national and provincial governments, the private sector, and Mercosur partners. Failures in any segment may undermine the credibility of the entire system and result in a worse risk classification. A single gap can contaminate the entire chain.

Even if classification is unfavorable, a formal rebuttal mechanism exists. If the Commission intends to classify a country as high risk, it must notify it and allow a written response with detailed corrective measures. Argentina should already be systematizing this information with robust indicators.

The core issue: the tension between domestic policy and market access

This scenario reveals an unavoidable reality: environmental standards are now a condition for trade. The trend points toward increasing requirements, as asymmetries between blocs allow concentrated buyers to impose conditions on fragmented suppliers.[3]

There is a legitimate debate on whether Mercosur should passively comply with EU standards beyond its own legal framework. The EU’s climate narrative should not be romanticized: its own documents highlight the need to protect its industries from less regulated competitors, revealing a protectionist dimension. These tensions also raise concerns within the WTO, where environmental measures must not become disguised trade barriers.[4]

Argentina has a longstanding commitment to climate action, reaffirmed in agreements such as the Paris Agreement. However, this does not imply accepting external regulations that may function as competitiveness tools. Distinguishing between both requires strategy, not rhetoric.

The problem is that such a strategy is currently absent. Environmental issues have been sidelined in public debate, while the government advances legislative changes to relax key regulations. The ease of modifying the Glacier Law may encourage similar reforms to the Forest Law.[5]

This is the trap. A modification of the Forest Law enabling land-use change directly conflicts with EUDR requirements. Not because Argentina lacks sovereignty—it does—but because the European market will not absorb those products. Acting with intensity but without strategy may produce the opposite outcome.[6]

Currently, the EUDR applies only to forests. However, future extensions to ecosystems such as wetlands, peatlands, or savannas are foreseeable, further complicating export conditions.

What needs to be done before the clock runs out

To balance trade liberalization, maintaining export levels is essential[7]. Commercial diplomacy must align definitions such as “deforestation” or “forest degradation”—based on FAO criteria—to avoid border disruptions.

This requires coordination between national and provincial governments, the private sector, and Mercosur partners, especially Brazil. Without it, trade gains may be neutralized by domestic inconsistencies.

Trade diplomacy and environmental policy are not separate domains. Decisions taken in Argentina have direct consequences in European ports such as Hamburg or Rotterdam. Ignoring this connection is not sovereignty—it is strategic short-sightedness.

Ariel Martínez is a former Undersecretary for Political Coordination at Argentina’s Ministry of Agriculture, Livestock and Fisheries, where he was also responsible for International and Trade Relations. He represented the Ministry in the G20, Mercosur, the FAO, and the IICA.He previously served as Secretary of Productive Development and Environment for Tierra del Fuego, Antarctica and South Atlantic Islands.He is a member of the Argentine Institute for Agroindustrial Development. He serves as an advisor to the Unión por la Patria parliamentary bloc on international relations, production, and environmental issues, and as an industrial policy advisor to the Municipality of Almirante Brown.He works as a consultant in political strategy and international economic relations, specializing in productive development. He holds a degree in Sociology from the University of Buenos Aires (UBA) and is currently pursuing a Master’s degree in International Politics and Economics at the University of San Andrés.

[1] Regulation (EU) 2023/1115, in recitals 33, 34 and 35, explicitly establishes that local legality is not a sufficient condition. According to data cited in the regulation itself, between 2013 and 2019 around 30% of deforestation linked to agricultural or livestock expansion in tropical countries was legal under the producing country’s regulations. The rule seeks to address this ‘defect’ of previous frameworks by allowing areas legally authorized by sovereign states to still be classified as ‘deforestation’.

[2] It is important to note that due diligence obligations are not limited to operators and traders. Several Members of the European Parliament have proposed extending them to European financial institutions—banks and insurance companies—thus significantly broadening the scope of the control system.

[3] For further analysis on the trade–environment tension, see: Marchesi, Guillermo H., 'International Trade and Environmental Requirements: A Perspective from the New Globalization', Revista Crítica de Derecho Privado, No. 22, 2025, La Ley Uruguay; and Merke, Federico.

[4] The EU–Mercosur Association Agreement explicitly preserves the sovereign right of the Parties to regulate within their territories and to establish their own levels of environmental protection.

[5] On the potential modification of the Glacier Law, see: Adaro, Roberto, DT No. 13, 'Is it Necessary to Modify the Glacier Law?', Centro Cultural de la Cooperación.

[6] An illustrative case of how pursuing a commercial objective with force and little strategy can produce the opposite outcome: Evenett, Simon J. – "The Supreme Court Rules, Uncertainty By Design Remains: A Guide to the New US Tariff Regime" – Global Trade Alert, February 20, 2026 (revised February 23, 2026). The author explains that the aggressive tariffs imposed by Trump under the IEEPA, after being invalidated by the Supreme Court, triggered Section 122. The strategy of “uncertainty by design” led foreign exporters to accelerate shipments to the United States to take advantage of the cost window, thereby expanding the trade deficit in the short term—the opposite of the intended outcome.

[7] This note does not address the debate on the Agreement’s impact on Argentina’s industrial development or the broader structural balance. The analysis is limited to balance-of-payments flows: if EUDR restrictions block key agro-industrial exports, the deterioration of the current account could be significant. In that scenario, the only institutional mechanism incorporated by the parties with response capacity is the rebalancing clause, introduced in the 2023 negotiations primarily at the joint initiative of Argentina and Brazil. This provision allows for a request to review the terms when substantial unforeseen imbalances arise. However, activating this mechanism effectively is not automatic: it requires solid technical evidence, coordination among the member states, and sustained negotiating capacity. In the absence of a state-level strategy that articulates the public administration, the private sector, and civil society, the rebalancing clause remains a dead letter in the text of the agreement.