Brazil

Brazilian Congress Approves EU-Mercosur Trade Agreement

On March 17, the Brazilian Congress approved the free trade agreement between Mercosur and the European Union. This was the final step for the agreement to take effect in Brazil. Other Mercosur member states, Argentina, Uruguay, and Paraguay, have also ratified the agreement.

On the EU side, the European Parliament requested a legal review of the agreement by the EU Court of Justice in January. On March 23, the EU announced that the agreement would be provisionally applied starting May 1, 2026. Despite this progress, the agreement still faces resistance within Europe.

Under the treaty, the bloc comprising Argentina, Brazil, Paraguay, and Uruguay will eliminate tariffs on 91% of European goods over 15 years. The EU will eliminate tariffs on 95% of Mercosur goods over 12 years.

The agreement between Mercosur and the EU will directly impact the Brazilian timber sector, particularly promoting the export of processed wood, panels, paper, pulp, and furniture. However, while the agreement expands opportunities, it also makes it more urgent for the industry to adapt to European market rules and requirements. Notably, the EU Deforestation Regulation (EUDR) stands out as a key challenge.

Global Situation Pressures Brazilian Timber Market

Recently, the WoodFlow platform organized a seminar to discuss the impact of geopolitical instability on the wood market.

Marcelo Wiecheteck, Head of Strategy Development at STCP, pointed out that energy and trade dynamics are closely linked, with the Middle East, especially the Strait of Hormuz, being a critical chokepoint. Although the Strait of Hormuz is not a primary destination for Brazilian wood exports, approximately US$133 million worth of forest products were exported to the region last year, mainly concentrated in countries like the United Arab Emirates and Saudi Arabia.

Analyzing the situation in early 2026, Wiecheteck noted that the first few months were severe, particularly for softwood products like pine, which saw a significant drop in sales. On the other hand, sales of tropical products picked up, mainly because this product category had not been previously affected by tariff measures. He also stated that recent tariff reductions might create room for recovery in some segments in the coming months.

Brazilian Government Selects 11 Projects to Restore Nearly 3,000 Hectares of Amazon Forest

On March 11, the Brazilian government announced the selection of 11 projects to restore 2,877 hectares of forest in the Legal Amazon region, with a total investment of R$69.5 million.

These projects are part of the fourth call for proposals under the "Restaura Amazônia" (Restore Amazon) program and will be implemented in the states of Acre, Rondônia, Tocantins, Mato Grosso, Pará, and Maranhão.

The President of the Brazilian National Bank for Economic and Social Development (BNDES) stated that by supporting programs like Restaura Amazônia, the government is committed to transforming degraded areas into new productive forests, thereby generating income, jobs, and nature-based solutions for climate change.

Mexico

Mexico Invests US$26 Million in Four-Satellite Project

The Mexican federal government is advancing an investment plan worth 540 million Mexican Pesos (approximately US$26.1 million) aimed at deploying an Earth observation constellation composed of four satellites to reduce dependence on foreign data suppliers. This plan, named the "Ixtli Mission," is expected to complete satellite orbit insertion by 2028.

The constellation will provide proprietary satellite imagery to over 50 government agencies currently dependent on purchasing data from international suppliers. These agencies include the National Forestry Commission (CONAFOR), the National Institute of Statistics and Geography (INEGI), and the Secretariat of Environment and Natural Resources of Mexico (SEMARNAT), which currently rely primarily on external satellite services from US and European companies. This dependence generates annual expenditures of approximately US$10 million.

The Ixtli constellation will focus on monitoring climate-related phenomena, including forest fires, forest health, landslides, crop growth conditions, and biodiversity, as well as human settlement expansion and national security issues.

Mexico's SEMARNAT Resumes Forestry Permit Issuance in Chihuahua

Since the departure of the previous representative of the Ministry of Environment and Natural Resources (SEMARNAT) in Chihuahua, the issuance of forestry permits in the state had been suspended since January. This suspension hindered operations in the timber sector and affected the entire production chain in the state. Javier Portillo Mares, President of the Parral Timber Producers Union, had previously stated that the timber industry in the Parral region faced increasing paralysis due to the lack of new annual forest harvesting permits. These permits are typically issued in January or by mid-February at the latest; however, by mid-March, permits had still not been issued.

Furthermore, the National Confederation of Transporters (Conatram) had stated that approximately 50% of timber transporters in the mountains of Chihuahua were at a standstill due to the lack of forestry permits certifying the legal origin of the timber and authorizing its transport.

However, by the end of March, the printing and verification of permits in the state had been initiated, providing much-needed momentum to the timber industry.

Rising Fuel Prices Affect Timber Industry in Parral

Due to the geopolitical situation in the Middle East and related conflicts, diesel prices in Parral have increased, strongly impacting the road transport sector. Currently, this region has one of the highest diesel prices nationwide.

Javier Portillo Mares, President of the Parral Timber Producers Union, stated that rising fuel prices directly affect the entire production chain, especially by increasing timber transport costs.

Simultaneously, the influx of imported timber intensifies market competition, forcing local producers to lower prices. The combination of high costs and low selling prices compresses corporate profit margins.

Ecuador

Ecuador-US RTA Signed; Timber Industry to Benefit

On March 13, 2026, Ecuador and the United States signed a Reciprocal Trade Agreement (RTA). Under this agreement, the US will grant Most-Favored-Nation (MFN) tariff treatment to specific goods from Ecuador, meaning the elimination of additional taxes/surcharges on these products.

Based on 2025 trade data calculations, the trade value affected by US surcharges reached US$2.786 billion, accounting for 53% of Ecuador's total non-oil exports to the US.

Beneficiary sectors include the forestry and timber industry, allowing related products to enter the US market at lower costs. The forestry and timber industry is one of Ecuador's main export sectors to the US, and with the RTA set to take effect, the industry hopes more of its products will be included.

The President of the Ecuadorian Forestry and Timber Industry Association (AIMA) explained that during the RTA negotiations, the industry successfully secured the inclusion of plywood in the agreement. Plywood products account for 51% of the Ecuadorian forestry sector's exports to the US. Currently, these goods face an 18% tariff (including a 10% surcharge). Once the agreement takes effect, this tax burden will revert to the standard tariff rate of 8%.

The AIMA President stated that plywood was successfully included in the agreement because its manufacturing uses tropical hardwood species that the US cannot produce, giving Ecuadorian manufacturers a unique competitive advantage.

FAO Presents Results of Ecuador's National Forest Assessment

Gherda Barreto, the representative of the Food and Agriculture Organization of the United Nations (FAO) in Ecuador, recently presented the results of the country's National Forest Assessment. This study, hailed as one of the most rigorous technical efforts carried out in the country to date, covered an area of approximately 10,000 hectares and successfully collected data on about 30,000 plant species.

The main objective of this study, conducted with technical support from the FAO, was to provide baseline data and reference information for the Ministry of Environment and Energy to develop the National Forest Strategy.

A key finding of this assessment is the need to improve forest cover in livestock production areas. To this end, Barreto announced that the country will prioritize this year the development of an agroforestry and silvopastoral investment plan called Forest-Positive Livestock Farming.

The goal of this plan is to encourage a significant increase in investment from the livestock sector to adopt operational models that allow for the harmonious coexistence of livestock production and forest cover, thereby curbing uncontrolled deforestation.

Ecuadorian Government Declares State of Emergency Nationwide Due to Winter Storms

The Ecuadorian government declared a state of emergency nationwide due to severe damage caused by winter storms. The National Risk Management Secretariat officially issued the measure on March 12, 2026, and the state of emergency will be in effect for 60 days.

According to official reports, the storms have caused damage in all 24 provinces of Ecuador, affecting 190 cantons and 590 parishes. The storms triggered various disasters, including floods and landslides.

Between January 1 and March 12, 1,662 rainfall-related disaster events were recorded. Among these, floods accounted for approximately 38% and landslides approximately 37%. Soil erosion, land subsidence, mudslides, and heavy rainfall were also reported.