05.04.2024
Three weeks after the article we published on EUDR news, ITTO has summarised the reactions of players in the sector in Europe in its market report. We are sharing IITO article in our newsletter, while continuing to stress that the tropical timber sector is fully capable of meeting the challenge of the EUDR.
Mounting calls for delay to EU Deforestation Regulation
In recent weeks a growing number of trade associations and some politicians, many representing interests inside the EU, have been raising concerns around the timetable for implementation of the EU Deforestation Regulation.
The first real indication that the timetable may be slipping came on 7 March 2024 when the Financial Times (FT) published an article under the heading “EU delays stricter rules on imports from deforested areas”.
See: https://www.ft.com/content/8dab4dc6-197b-4a2f-86f0-d5e83ce00b09
The story in this article is not as dramatic as implied by the headline. It does not suggest any delay to the legal requirements due to be imposed on EU operators from 31 December 2024 – prohibiting their trade in regulated products from deforested areas. Only that “Brussels will put off classification of countries into low, standard or high risk, which was due to be implemented by December [2024], instead designating every country as standard risk”.
Drawing on information from “three EU officials”, the FT claims that the “the EU intends to delay strict policing of imports from areas prone to deforestation after several governments in Asia, Africa and Latin America complained that the rules would be burdensome, unfair and scare off investors”.
The FT goes on to quote one “EC official” directly: “We will simply not classify which means everywhere will be medium risk — we need more time to get the system in place. We have had a lot of complaints from partners. [The delay] means no country will have an advantage over another.”
While the FT article does not itself imply that other aspects of the law’s implementation will be delayed, it prompted an immediate response from EU trade and industry associations who suggested that any delay to the risk classification of countries required that the obligations to be placed on EU operators must also be delayed.
The case for this wider delay in EUDR implementation was made in a joint declaration issued on 12 March by six European organisations, namely: the European Confederation of Woodworking Industries (CEI-Bois), the European Furniture Industries Confederation (EFIC), the European Organisation of the Sawmill Industry (EOS), the European Panel Federation (EPF), the European Timber Trade Federation (ETTF), and the European Federation of the Parquet industry (FEP).
The industry statement, which is available at https://www.efic.eu/joint-statement-on-eudr suggests that “the benchmarking of countries is a central part of the EUDR and its implementation, and any delays related to this classification will only result in additional costs and administrative burden for market actors, without any real advantages either for the producing countries or for the CAs [EU Member State Competent Authorities]”.
The statement goes on to suggest that under EUDR “whether market actors source their commodities from standard risk countries or from high-risk countries, they are facing the same due diligence obligations. Simply put, the benefit implied by the seemingly planned delay of the country risk benchmarking does not exist because no simplified procedure for export or imports is actually foreseen for standard risk countries, compared to high risk countries”.
The six European organisations signing the statement expressed their regret that “the EUDR has become a huge administrative and regulatory monster” and urged “the EU institutions to delay the entry into application of the EUDR for the operators and traders to amend the EUDR in order to eliminate unnecessary bureaucratic hurdles and to provide actors with sufficient time to adapt for full and adequate compliance”. They also called on the European Commission to “swiftly proceed with the classification of the low-risk countries, with this action being its main priority”.
Concerns about the implementation timetable for EUDR were also raised by 19 wood trade organisations in France in a joint letter to the French Environment Minister on 13 March. This states that, “all the trade organisations that have signed this letter support the introduction of a legal instrument to guarantee that wood and wood-derived products have no impact on deforestation. However, the principle of ‘strict traceability’ and the processes envisaged by the EUDR are fraught with implementation difficulties and still raise questions of interpretation”.
The letter goes on to make specific reference to the results of the pilot test of the “information system” where due diligence statements, including geolocation data of all plots of land from which regulated products are harvested must be entered for every consignment imported into, or exported from, the EU market. The pilot test was undertaken between December 2023 and January 2024. The letter notes that “among the 112 European companies taking part in this test were several French companies in the forestry, wood and paper industry”.
After summarising six specific areas of weakness in the information system based on the experience of the French companies, the letter concludes that in view of “the extraordinary complexity of this [legal] text, its legal weaknesses and its many uncertainties….this European Regulation is inoperable for both operators and traders”.
The signatories of the joint letter therefore call for a revision of the EUDR after the European elections and ask the French Environment Minister to raise the issue at a meeting they say is scheduled on April 3rd about the EUDR with the Belgian Presidency.
A sign of the mounting momentum behind the calls for a delay to the EUDR came in a Reuters news report which stated that at a closed-door meeting of the European Agriculture and Fisheries Council on 26 March “Agriculture ministers from 20 of the EU's 27 member countries supported a call by Austria to revise the law”.
The report quotes a statement by Austria's agriculture minister Norbert Totschnig that "We now urge the Commission for a temporary suspension of the regulation allowing for a feasible implementation accompanied by a revision of the regulation". Reuters report that Ministers from France, Italy, Poland, and Sweden were among the supporters of this position.
Judging by comments of the German Federal Minister of Food and Agriculture on the doorstep to the meeting on 26 March 2024, the call for delay is also supported by Germany. The Minister welcomed the EUDR “as a milestone […] for protecting the global forests […] and human rights […]” but also emphasised that “during the implementation the aim must be clear…the way must be flexible”.
The Minister went on to note that “Germany is a low-risk country, our forests are growing – an aspect that should also be taken into account by other EU Member States”. He called on the European Commission to “urgently extend the actual transition phase” suggesting that “if it does not quickly succeed in doing so, the law cannot be implemented for Germany as it would result in an unbearable workload for our economy, but especially for our [Competent Authority] and SMEs” (the above is an unofficial transcript of comments made by the Minister in German (at 7:57 minutes) in the doorstep interview at: https://newsroom.consilium.europa.eu/permalink/253320)
Legal and political obstacles to EUDR delay
While these calls are being made for a delay to EUDR implementation, there appear to be very significant legal and political obstacles to these being acted upon. As a representative of the European Forest Owners Federation (CEPF) has suggested (in the latest newsletter of the German GD Holz wood trade association) “a postponement is unrealistic, as this would require a new legislative procedure involving the Parliament, Commission and Council (the EUDR having already come into force in mid-2023)”.
In public statements, European Commission officials are not countenancing any talk of delay or flexible interpretation of the law. According to the Reuters report on 26 March, the EU Environment Commissioner Virginijus Sinkevicius “questioned why countries had raised concerns about the policy a few months before EU Parliament elections in June, when they had spent years negotiating the deforestation law and approved it last year.” The Commissioner is reported to have told a news conference that "of course, we will listen to the arguments, but I honestly don't see any issues.”
Similarly, according to a MercoPress article, on 8 March EC Environment envoy Emanuele Pitto told Paraguayan exporters in Asunción that there “would be no turning back from Rule 1115 [EUDR] banning raw materials and products associated with deforestation and forest degradation”.
The EC envoy emphasised to his Paraguayan audience that “all those involved get acquainted with the regulation and understand that the requirements are adapted to the needs of consumers”. He said that “if Paraguay wants to continue exporting to the countries of the bloc, if it is interested, it will do so by adapting to the [EUDR] requirements, but not of the European Union, but of the consumers”.
This implied, said the envoy, that exporters wanting to supply the EU must “demonstrate the origin of their products and that they are free of deforested land, for which the country needs a traceability tool or system that can geolocate whether or not the product comes from deforested land”. Furthermore in “case of non-compliance, sanctions and confiscations would ensue”.
The Financial Times returned to the subject of EUDR in an opinion piece headed “The global downside of European consumers’ green principles” published on 21 March. This comments that “Europe might be struggling for long-term economic growth, but its regulatory productivity is unsurpassed”.
See: https://www.ft.com/content/9ace290e-e51d-4a5e-b853-decfc55ffeb2
The central observation of the FT article is that the EU’s regulatory drive is not at all due to the ‘protectionist’ instincts of domestic producers in the EU. Instead, “European public and consumer sentiment, or at least campaigners’ influence, is now one of the most powerful forces determining swaths of EU trade policy and hence global regulation”. This observation seems borne out by the fact that there seem to be at least as many objections to EUDR implementation now coming from the wood-working industry inside the EU, as from external suppliers of the regulated commodities.
Environmental campaigning organisations were also quick to criticise the calls for a delay to EUDR. In an “open letter to EU governments” signed by 46 NGOs issued on 28 March the EU is urged to “uphold its commitment to combat global deforestation and forest degradation both at home and abroad”. “Any delay in implementation would hamper its credibility," the NGOs wrote, adding: “We urge all Member States to be at the forefront of a fast and effective implementation of EUDR, instead of falling for industries’ lobbying efforts.”
The NGOs open letter is at: https://www.fern.org/fileadmin/uploads/fern/Documents/2024/The_EUDR_will_only_work_if_MS_start_implementation_now.pdf
No expansion of regulations on imports
The UK Government has told members of parliament that it does not intend to extend its forthcoming ban on the sale of imported products linked to illegal deforestation to cover commodities linked to deforestation that is technically legal in the country of origin.
The possible implications for the tropical timber sector will be addressed in the next issue of this report.
The UK government statement can be found at:
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Again, ATIBT recognizes the problems with certain provisions of the regulation and the gaps in implementation, and remains mobilized to monitor the progress of this preparatory phase. The tropical timber industry has the capacity to rise to the challenge: timber has already been subject to the EUDR since 2013, and marketers and importers have been implementing due diligence practices for over 10 years. In addition, FSC® and PEFC/PAFC certifications are highly demanding in their criteria which, beyond purely forestry aspects (management, traceability), encompass respect for communities, workers' rights and safety, respect for the environment and protection of biodiversity.
