What is the EU Deforestation Regulation and why is it controversial?

Busting myths around EU efforts to end deforestation.

In December 2022, the EU agreed to adopt the Regulation on deforestation-free products (EUDR), which aims to tackle global deforestation and forest degradation driven by EU consumption and production of forest risk commodities.

The EUDR, which entered into force on 29 June 2023, will prohibit companies from putting products on the EU market unless they are deforestation-free, degradation-free and legally produced. It will also be illegal to export such products from the EU. The Regulation focusses on seven high-risk commodities, wood, soy, palm oil, coffee, cocoa, beef and rubber, and the products derived from them, such as chocolate, leather and paper. Countries will also be benchmarked according to their risk of deforestation – the lower the risk, the lower the required due diligence.

The European Commission has also created and is regularly updating Frequently Asked Questions to explain EUDR requirements. This will be followed by legally binding guidance about how to comply.

In the absence of clear answers, false claims are being circulated about the EUDR’s requirements and the potential effect on EU markets. Below we summarise some of the most oft-voiced concerns and compare them to the facts:

 

Myth: The EUDR will vastly increase bureaucracy for European farmers and foresters.

Facts: The EU Timber Regulation (EUTR) (Regulation (EU) No 995/2010) entered into application on 3 March 2013 and will be repealed when the EUDR enters into application on 30 December 2024. Requirements for both sets of legislation are similar, so forest owners who comply with existing legislation will not have to do much additional work.

Operators placing timber on the market for the first time will need to submit a due diligence statement and include geolocation data which should already exist in national systems if the farmers receive Common Agricultural Policy subsidies.

The geodata of fields or forests only need to be identified once and can be reused, and small-scale farmers/foresters can mandate the next operator or trader in the supply chain to act as its authorised representative, provided it is not a natural person or micro-enterprise.

The EUDR does, however, close major loopholes in the EUTR. It was previously impossible to remedy illegal timber that had entered the EU market, but this loophole has been closed by requiring all levels of the supply chain to fulfil due diligence obligations. In addition, rules that only applied to timber importers now apply to importers of other forest risk products.

 

Myth: The EUDR excludes overseas small-scale farmers from EU supply chains

Fact: Although it may be more difficult for small-scale farmers to implement geo-location and traceability requirements, the EUDR includes a suggestion that Member States and companies support them to comply.

In response, Member states have already set up the Team Europe Initiative (TEI), initially investing €70 million to, among other things, support smallholders to continue to benefit from EU supply chains. With the correct amount of EU funding, small-scale famers could benefit from the necessary deep transformation of traceability and transparency.

The situation does, however, differ depending on the commodity.

For palm oil, there are relatively few smallholders in the EU supply chain, meaning that the EUDR could be an opportunity to increase their market access, such as by investing in plants being used by small-scale farmers that are EUDR compliant.

For cocoa, and specifically cocoa from Côte d’Ivoire, most farms can already be EUDR-compliant, though they would need support with the costs of meeting traceability requirements – which some companies are already doing. The national traceability systems being developed in countries such as Brazil, Côte d’Ivoire, Ghana, Indonesia and Malaysia could help all farmers with the costs of traceability and mapping. Smallholder recommendations include:

• Conducting a review of EUDR impacts on smallholders and carrying out needs assessments.
• Supporting small producers to directly access the EU market, for instance through quotas, special tariffs or special market platforms as well as direct investments.
• Adopting good purchasing practices to defend small farmers’ living wages.
• Targeting technical and financial support towards smallholder compliance.

 

Myth: The EU will not have concluded countries’ deforestation risk rating before the EUDR enters into application, meaning companies will need to do full due diligence for all countries, including low risk ones.

Facts: The Commission has until 30 December 2024 to publish the risk categorisation. All countries will be considered as standard risk until the benchmarking is completed.

Although there could, therefore, be some increased work related to countries that are designated low-risk, it will be more than offset by the reduction in work related to high-risk countries.

Regardless of a country's deforestation risk classification, the geo-location identifying the origin of the raw materials they are exporting to the EU, needs to be included in the companies' Due Diligence Statement. This means that the delay in risk-rating would most affect Member State Competent Authorities. For low-risk countries they only need to inspect 1% of companies, rising to 3% for standard-risk and 9% for high-risk.

 

Myth: The information system for the Due Diligence Statements will not be ready by December 2024.

Facts: The information system is on track for delivery. Registration is expected to begin in November, training sessions will be organised for October and results of pilot testing are already available.

Up-to-date information on progress is available on the Commission website. It is true, however, that shipping can take months, meaning that some products that need to comply are already being shipped.

Categorías: FAQs, EU Regulation on deforestation-free products