EU reaches provisional deal on new deforestation law

The provisional agreement sets mandatory due diligence rules for all operators and traders who place, make available or export the following commodities from the EU market.

Source: freepik
December 7, 2022

The Council and the European Parliament reached a provisional deal on a proposal to minimize the risk of deforestation and forest degradation associated with products that are imported into or exported from the European Union. The agreement is provisional pending formal adoption in both institutions.

The provisional agreement sets mandatory due diligence rules for all operators and traders who place, make available or export the following commodities from the EU market: palm oil, beef, timber, coffee, cocoa, rubber and soy. The rules also apply to a number of derived products such as chocolate, furniture, printed paper and selected palm oil-based derivates. A review will be carried out in two years to see if other products need to be covered.

The co-legislators set the cut-off date of the new rules at December 31, 2020, meaning that only products that have been produced on land that has not been subject to deforestation or forest degradation after December 31, 2020 will be allowed on the Union market or to be exported.

The co-legislators agreed on stringent due diligence obligations for operators, which will be required to trace the products they are selling back to the plot of land where it was produced. At the same time, the new rules avoid duplication of obligations and reduce the administrative burden for operators and authorities. It also adds the possibility for small operators to rely on larger operators to prepare due diligence declarations.

The Council and Parliament agreed to set up a benchmarking system, which assigns to third and EU countries a level of risk related to deforestation and forest degradation (low, standard or high). The risk category will determine the level of specific obligations for operators and member states’ authorities to carry out inspections and controls. This would facilitate enhanced monitoring for high-risk countries and simplified due diligence for low-risk countries.

The agreement also takes into account human rights aspects linked to deforestation, including the right to free, prior and informed consent by indigenous peoples.

Industry reaction

COCERAL, FEDIOL, and FEFAC welcome aspects of the deal on the EU regulation that will prove positive for the implementation through the palm oil and soy supply chains, such as guidelines, the timelines for implementation of 18 months, and lower percentage of checks for low-risk countries. COCERAL, FEDIOL, and FEFAC also consider positively that the agreement refrains from broadening the scope to maize and to other ecosystems from the outset, without further assessment of the implications.

On the other hand, COCERAL, FEDIOL, and FEFAC regret that the requirement for traceability and implied chain of custody, as defined, will have a number of unintended consequences. These consequences will be felt deeply, particularly as this may lead to the exclusion of smallholders, the most vulnerable players in these supply chains, given the tight implementation deadline, or to disinvestment from high-risk areas. Failure to set in place similarly ambitious accompanying measures for government-to-government engagement and partnerships, with incentives and support, will not help overcome the many legal, organizational or logistical impediments arising, as operators will be looking at implementing the EU regulation throughout these complex supply chains.

The deal between European Parliament and Council on the deforestation regulation needs to be examined in further detail and its implications will require further assessment. COCERAL, FEDIOL, and FEFAC remain fully committed to supporting solutions for the implementation of the Regulation to make it work in practice and at the same time to tackle global deforestation.