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Perspective

Trase urges EU to reject last minute amendments to deforestation regulations

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Perspective

Trase urges EU to reject last minute amendments to deforestation regulations

Amendments to the EU deforestation regulations proposed by the EPP group in the European Parliament are not based on evidence and could breach free-trade rules, write Helen Bellfield and Toby Gardner, Trase’s co-directors, in an insight.

Toby Gardner, Helen Bellfield / Published on 20 November 2024

Perspective contact

Ylva Rylander / ylva.rylander@sei.org

The EU deforestation regulation (EUDR) aims to prevent products associated with deforestation entering the EU market. At its heart is a three-tier benchmarking system to classify commodity-producing countries (and parts thereof) as low, standard or high risk. The system will enable enforcement authorities to target checks on products from high-risk countries and allow regulated companies to undertake simplified due diligence for products from low-risk countries.

The EPP group in the European Parliament has proposed several amendments including one to introduce a further category of “no risk” for countries that would not need to fulfil the deforestation-free criteria or submit a due diligence statement. This means that they would not need to provide information on the geographical location where the products originated. However, they would still need to demonstrate that the products were legally produced, as well as providing basic information about the product type, quantity and its supplier or trader. Confusingly, they would also have to be able to prove that the products are “free of forest degradation”, though this is only relevant to the deforestation criteria that products would be exempted from for no risk countries, not the legality criteria. Checks by enforcement authorities on products from “no risk” countries would be limited to 0.1% of regulated companies.

Under the amendments approved by a very narrow margin in the European Parliament last week, countries would qualify for the “no risk” category provided that three criteria are met: 1) the area of forest coverage in the country has remained stable or increased compared to 1990; 2) it has signed the Paris Climate Agreement and international conventions on human rights and preventing deforestation; 3) enforced regulations on preventing deforestation and forest conservation at national level are strictly implemented in full transparency and monitored.

An interactive map of Argentina highlighting emissions from territorial deforestation. A tooltip for the Patino region in Formosa Province shows 20,025,614 tons of CO2-equivalent emissions in 2020, with a graph tracking emissions over time.

Trase’s interactive map visualizing emissions from territorial deforestation in Argentina, with detailed regional data for 2020.

Graphic: Trase Earth.

Lack of scientific rigour

The EPP justifies its amendments on the grounds that countries with stable or increasing forest areas are of “negligible or non-existent” risk of deforestation under the EUDR and that a simplified set of requirements would “encourage sustainable practices and reward responsible sourcing”.

This attempted justification does not stand up to even a cursory level of scientific scrutiny.

In fact, the first criteria of net forest area is an extremely poor indicator of the presence of deforestation and degradation. Data from the Food and Agriculture Organization’s Global Forest Resources Assessment shows that countries can have a stable or net increase in forest area but still have widespread deforestation or forest degradation. For example, both Vietnam and Thailand have seen net increases in forest area since 1990, and yet both have significant levels of deforestation linked to the expansion of agricultural commodities.

Trase data consistently shows that deforestation is highly concentrated within countries and that variability in deforestation within countries is often much higher than that between countries. As such, an overall net increase in forest cover can easily mask significant levels of deforestation and forest degradation. For example, while Europe’s forest area is increasing overall, its old growth forests, which make up only 3% of the total forest area, are at significant risk of deforestation.

Legal uncertainty

Applying the net forest area criteria could lead to 25 of the 27 EU member states being classified as “no risk” and could be seen by other producer countries as a protectionist measure, further fueling criticism that EUDR is a unilateral measure being imposed on countries outside the bloc. The EPP has stated that it has not checked whether its proposals would breach World Trade Organization (WTO) rules. This raises significant concerns as it creates legal uncertainty to companies, investors and stakeholders, and may ultimately undermine the integrity of the risk-benchmarking system and the effective implementation of the EUDR.

The second criteria on international conventions provides little, if any, guarantee that relevant products and commodities are deforestation free and legally produced. The recent Forest Declaration Assessment found that the world remains off track to reach the goal agreed at COP26 of halting and reversing deforestation and forest degradation by 2030. Globally, 6.37 million hectares of forest were permanently lost in 2023 and regional deforestation targets were missed in almost all tropical regions.

The third criteria on enforced regulations on preventing deforestation and forest conservation are strictly implemented in full transparency and monitored is unlikely to be met by many countries including member states. For example, in recent years the EU has ruled that Estonia, Poland, Slovakia, Sweden and Romania have not adequately implemented existing forest conservation regulations.

A screenshot showing a searchable list of Trase datasets. Includes data for supply chains in Indonesia, Brazil, and Argentina, covering commodities like soy, beef, wood pulp, and palm oil.

Explore Trase’s comprehensive database of supply chain data, covering key commodities and global regions.

Graphic: Trase Earth.

Significant loophole

The benchmarking system within the EUDR already provides a simplified due diligence procedure for countries (or parts thereof) classified as low risk to provide incentives and target enforcement efforts. However, by still requiring operators to submit a due diligence statement and collect relevant information including the geolocation data, it provides safeguards against the risk of laundering and circumvention. In contrast, the EPP amendment provides a significant loophole and makes it much more challenging for competent authorities to identify laundering and enforce the regulation effectively.

Given the subjectivity of the proposed criteria, their lack of scientific rigour and the risk of inconsistencies with WTO rules, Trase strongly recommends that the EU rejects all of the proposed amendments to the EUDR. Instead, all stakeholders should make the best use of the one-year delay in the implementation of the regulation proposed by the European Commission to further develop the guidance, partnerships and finance needed for the EU to play its part in achieving a successful transition to deforestation-free commodity supply chains.

A data visualization showing key statistics about Côte d’Ivoire’s cocoa industry in 2022. It highlights export volumes, regions of production, top importing countries and companies involved.

Key insights from Trase data on Côte d’Ivoire’s cocoa supply chain, highlighting export companies, production hotspots and importing countries.

Graphic: Trase Earth.

Featured

Toby Gardner
Toby Gardner

Senior Research Fellow and Trase Co-Director

SEI Headquarters

Further information

About EUDR and Trase

Trase will continue to support the effective implementation of the EUDR by investing in the enabling information environment. Further questions and feedback on how we can help ensure its success are welcome by email to [email protected].

Trase is a data-driven transparency initiative that maps the international trade and financing of agricultural commodities, providing tools that enable companies, financial institutions and governments to address tropical deforestation. This not-for-profit partnership was founded in 2015 by SEI and Global Canopy.

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