EU deforestation legislation faces backlash from host of producer countries claiming its “inherently discriminatory”

19 Sep 2023 --- Indonesia, Brazil and Malaysia have sent a joint letter to the EU and its Commission (EC) flagging “multiple concerns” regarding the recent introduction of the deforestation regulation. They are suggesting EU authorities “engage in a more meaningful and open dialogue with producing countries” to establish effective cooperation with its trade partners.

The EU regulation on deforestation-free products (EUDR), introduced on June 29 this year, aims to promote the consumption of “deforestation-free” products and reduce the EU’s impact on global deforestation and forest degradation.

Hence, it will affect the sale and trade of palm oil, soy, beef, coffee, cocoa, timber and rubber, including its derivatives like palm kernel oil or cocoa butter, widely used in personal care products and food.

However, the letter, sent last Thursday, reiterates the same message as a previous letter from 2022:

“The legislation disregards local circumstances and capabilities, national legislations and certification mechanisms of developing producer countries, their efforts to fight deforestation and multilateral commitments, including the principle of common but differentiated responsibilities.”

In its critique, the ambassadors add: “The EU’s ‘one-size-fits-all’ approach, implemented through this model of due diligence and traceability, ignores the different local conditions and will inevitably impose immense costs on exporting and importing countries alike, as well as on producers and consumers,” underscores the letter.

The document accompanies signatures from ambassadors of Argentina, Bolivia, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Paraguay, Peru, Thailand, Nigeria, Ghana, Ivory Coast and Honduras.

Inconsistent with WTO obligations?The EU regulation on deforestation-free products was introduced on June 29, 2023.
An EU official previously told Personal Care Insights that operators and traders will have to prove that the products are deforestation-free (produced on land not subject to deforestation after December 2020) and legal (compliant with all relevant applicable laws in force in the country of production).

“Companies will also be required to collect precise geographical information on the farmland where the commodities that they source have been grown, they can be checked for compliance,” adds the spokesperson.

However, the ambassadors state that the deforestation legislation authoritatively “establishes a unilateral benchmarking system that is inherently discriminatory and punitive” and is “potentially inconsistent with WTO obligations.”

WTO members agree to a non-discriminatory trading system, where they receive guarantees that their exports and imports will be treated fairly and consistently by other market members.

The letter raises concerns from developing countries that the legislation will be implemented in less than 18 months, however, the EU is still working on its implementing acts and guidelines.

The ambassadors suggest that the EU “should work to repair this legislation, or, at a minimum, aim to mitigate its more harmful impacts” by implementing guidelines.

These should value existing and developing local, sustainable practices in agricultural value chains while avoiding trade disruption “including the excessive administrative burden related to the geolocation and traceability requirements, certifications and customs procedures.”

Prioritizing cooperative SDGsThe ambassadors emphasize commitment to the SDGs and multilateral environmental agreements and goals.
Apart from the high costs involved, the ambassadors “consider that the legislation, by itself, will bear no positive impact on deforestation rates.”

According to a recent report, tropical primary forest loss worsened last year – losing 10% more primary rainforest than in 2021 – despite international commitments to end deforestation.

The legislation is predicted to produce other “adverse effects, such as increased poverty, diversion of resources and hindrance of the attainment of SDGs.” Some of these include “No Poverty,” “Reduced Inequalities,” “Responsible Consumption and Production,” and “Partnerships for the Goals.”

Yet, the legislation aims to “reduce carbon emissions caused by EU consumption and production of the relevant commodities by at least 32 million metric tons a year.” The legislation could fall under “Climate Action” and “Life on Land” of the SDGs.

Previously, industry insiders warned that the EU transparency rules could shift environmentally damaging activities from monitored to unmonitored regions if demand for forest-based products persists.

Seeing this danger, the ambassadors emphasize commitment to the SDGs and multilateral environmental agreements and goals.

Highlighting shared objectives and the need to collaborate to tackle global challenges, the ambassadors invite the EU to engage in cooperation and discussions “to jointly address the impact of EU legislation and its implementing instruments, including providing support to facilitate trade.”

Smallholders will bear the bruntThe ambassadors critique the EU’s ‘one-size-fits-all’ approach that will inevitably impose immense costs.
The ambassadors also voice concerns about the impacts of the legislation on smallholders who are especially vulnerable to the EUDR.

“The EU should acknowledge the efforts made by developing countries to improve their livelihood and sustainability practices as well as the significant challenges faced by them regarding limited access to financing schemes, new technologies and technical training and assistance,” reads the letter.

“Smallholders may end up being excluded from international value chains not because they have deforested their land but due to their inability to show compliance with the stringent requirements imposed by the EUDR. That would unfairly deprive smallholders of an important source of income and livelihood and even impact their ability to adopt sustainable practices.”

However, it should be noted that micro and small enterprises will have more extended adaptation periods and other specific provisions.

The ambassadors call on the EC to provide “clear and detailed implementing acts and guidelines that include differentiated compliance and due diligence regimes for commodities and products originating from smallholders in developing countries considering that EU SMEs will be granted more flexible treatment.”

By Venya Patel

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