Following passage of the EU Deforestation Regulation into law on 31 May and with enforcement now due to start in no more than 15 months, policy makers both inside and outside the EU have been taking a hard look at potential impacts.<\/p>\n
The world\u2019s media is also waking up to the wider political fallout and implications of the law for global forest products and agricultural supply chains.<\/p>\n
Perhaps the most prominent concern about the law expressed by politicians and trade analysts outside the EU is the stipulation that producers and traders must provide precise geographical coordinates for all plots of land (defined as a \u201cland within a single real-estate property\u201d) from which products are sourced with every individual consignment placed on the market.<\/p>\n
This is expected to be particularly challenging for commodities sourced from smallholders and which account for a large share of supply of the regulated products. The European Commission, for its\u2019 part, insists that there are sufficient safeguards in place to avoid arbitrary or unjustifiable discrimination or trade restrictions.<\/p>\n
An article was published in Euronews on 20 September under the heading \u201cWhy the Global South is against the EU's anti-deforestation law\u201d.<\/p>\n
The article reports on a letter sent to EU Commission and Parliament officials earlier this month by the Ambassadors of 17 countries describing EUDR as an \"inherently discriminatory and punitive unilateral benchmarking system that is potentially inconsistent with WTO obligations\".<\/p>\n
The signatories from Argentina, Brazil, Bolivia, Colombia, Dominican Republic, Ecuador, Ghana, Guatemala, Honduras, Indonesia, Ivory Coast, Malaysia, Mexico, Nigeria, Paraguay, Peru, and Thailand \u2014 called for a change to the legislation and \"open dialogue\" about possible mitigation measures, in particular to help small and medium-sized companies.<\/p>\n
Euronews quotes Pedro Miguel da Costa e Silva Brazil's ambassador to the EU as stating that \"The legislation is unilateral, as it was created without an effective dialogue with producer countries and without being supported by any agreement negotiated at international level\". Commenting on the letter, Adalbert Jahnz, a spokesperson for Virginijus Sinkevic\u030cius, the European Commissioner for Environment, Maritime Affairs and Fisheries, rejected the accusation that the law is discriminatory on grounds that \"it will also be applied to domestic producers...Therefore, it will be implemented in an even- handed manner that does not constitute arbitrary or unjustifiable discrimination for third-country producers, or a disguised restriction to trade. It was designed to be fully compatible with World Trade Organiation rules\".<\/p>\n
In a Financial Times article published on 20 August, the Head of the International Trade Centre (ITC) is reported as suggesting that the EUDR may have a \u201ccatastrophic\u201d impact on global trade if the bloc does not help small producers and developing nations to adapt.<\/p>\n
Pamela Coke-Hamilton, Executive Director of the ITC, a joint agency of the UN and World Trade Organization, told the Financial Times that a ban on goods linked to deforestation from entering the EU favoured big companies that can trace where their produce had been grown and risked \u201ccutting off\u201d smaller suppliers.<\/p>\n
\u201cWhat the biggest producers may do is, not being able to do the traceability for these small farmers, simply cut them off\u201d, Coke Hamilton is reported to have said to the FT. Depending on how well the EU addressed its outreach to developing countries the impact of the law on global trade could be \u201ccatastrophic or it could be OK\u201d, she added.<\/p>\n
If small producers could not meet the requirements for exporting goods covered by the law this risked \u201ca vicious cycle\u201d, Coke-Hamilton said in another comment to the FT. \u201cOnce you have loss of market share, you have loss of income, then you will have lots of increased poverty, then increased deforestation because at the root of deforestation is poverty. We [risk] falling into the trap of reinforcing something that we\u2019re trying to change\u201d, she added. Coke-Hamilton also said to the FT that information requirements and the obligation to use geolocation technology presented too much of a burden. \u201cMany [smallholders] are trying to just keep up with post-Covid, the cost-of-living crisis, climate change. They\u2019re just caught in this maelstrom of survival\u201d, she is quoted as saying in the FT.<\/p>\n
In response, a spokesperson for the European Commission told the FT that the EUDR \u201capplies to commodities, not countries, and is neither punitive nor protectionist, but creates a level playing field. It will be implemented in an even-handed manner that does not constitute arbitrary or unjustifiable discrimination for third-country producers, or a disguised restriction to trade.\u201d<\/p>\n
Similar concerns about the potential impact of EUDR on smallholders are raised in an article published on 20 September on Mongabay, the environmental website, drawing on interviews with independent trade analysts.<\/p>\n
The Mongabay article suggests that \u201cwhile the regulation is a step toward transparency and international deforestation-free supply chain management, observers say it places millions of smallholders who depend on access to the EU market in a vulnerable position. Many small-scale farmers lack the technical capacity and financial capital to meet the hefty due diligence requirements of the new rules\u201d.<\/p>\n
Quoting Phuc Xuan To, a policy adviser to the Forest Trends thinktank, Mongabay notes that smallholders produce 95% of Vietnam\u2019s coffee, 42% of Indonesia\u2019s palm oil and 95% of Thailand\u2019s rubber.<\/p>\n
In Vietnam alone, more than 2 million smallholders operating across roughly 6 million plots of land are engaged in the country\u2019s three major forest-related commodities that enter EU markets and are directly affected by the new rule. Vietnam\u2019s timber, rubber and coffee generate combined revenue from the EU in excess of $2.5 billion annually.<\/p>\n
\u201cThere are a lot of concerns and worries about [the EUDR],\u201d Phuc told Mongabay. \u201centire sectors, like the Vietnam coffee industry, are unsettled; many don\u2019t know where to start and it\u2019s particularly challenging for smallholders.\u201d<\/p>\n
Phuc told Mongabay that the process of verifying land use rights and plantation registration certification, let alone gathering geolocation data, is protracted, complex and slow in many parts of Southeast Asia. Phuc said that the monitoring systems and databases simply don\u2019t exist and that EUDR compliance will be \u201chighly challenging if not impossible\u201d over the short term.<\/p>\n
Phuc also highlighted to Mongabay the challenges of dealing with the complex supply chains that are typical of South East Asia: \u201cIf we look at how Vietnam imports timber from Laos, rubber from Cambodia, coffee from Laos ... once it enters the country it is mixed with locally sourced supplies and then exported to Europe. How can those imports be traced? We\u2019re not talking about small- scale imports here, there\u2019s more than $1 billion worth of rubber imported from Cambodia each year, it\u2019s on a massive scale.\u201d<\/p>\n
Similar concerns are expressed by Nathalie Faure, a senior program officer at RECOFTC, a Thailand-based community forestry nonprofit, when speaking to Mongabay. Faure does highlight that benefits may flow from the EUDR, given sufficient support for reform processes. \u201cThe purpose of the regulation is really to create the sustainability of products, so there\u2019s potential for having better access to information, better rules around sustainability, greening local economies,\u201d Faure told Mongabay. \u201cAnd it might create legal reforms in relation to certain aspects, such as land tenure, sustainability and trustability.\u201d<\/p>\n
But Faure added in her comments to Mongabay, that there\u2019s a risk of traders cutting ties with smallholders deemed \u201chigh risk\u201d under the new EU rule and switching to larger, less scrupulous and less ethical suppliers, but with larger capital to comply. This, ultimately, would undermine the EU\u2019s intention, she told Mongabay.<\/p>\n
Tran Quynh Chi, a regional director at IDH \u2013 the Sustainable Trade Initiative, a social enterprise headquartered in the Netherlands, told Mongabay the new rules serve as an opportunity for forest commodity sectors to develop more responsible approaches to business. \u201cThis is really an opportunity to make the markets and the sector transformed toward more transparency and sustainability,\u201d Tran told Mongabay.<\/p>\n
Tran said 10-15% of smallholders engaged in the coffee sector in Vietnam live in poor rural regions close to forest edges. If mechanisms aren\u2019t put in place to help such producer groups maintain access to supply chains, \u201cthere\u2019s a very big risk that they\u2019ll be excluded from the EU market, and that will drive up poverty levels,\u201d she said.<\/p>\n
Furthermore, Tran told Mongabay that smallholders living close to natural forests who are unable to comply with the new regulations \u201cmight be forced to go further into the forest to eke out a living\u201d if excluded from EU supply chains.<\/p>","protected":false},"excerpt":{"rendered":"
Following passage of the EU Deforestation Regulation into law on 31 May and with enforcement now due to start in no more than 15 months, policy makers both inside and outside the EU have been taking a hard look at … Continue reading