EU Proposal On Deforestation Free Products

by Yara van Ingen

Note from the Editors: On the 6th of December 2022, MEPs reached a preliminary agreement with the EU governments (during what is known as a “trialogue”) on this law. Parliament and Council still need to formally approve the agreement. Once published in the EU Official Journal, the law will be in effect, although some articles won’t apply for another 18 months [11].

On the 13^th September the European Parliament voted in favour of a proposed Regulation on Deforestation-Free products that was brought forward by the European Commission in November 2021. The regulations would restrict imports on a set of commodities that have been identified as key drivers of deforestation and forest degradation. Only “deforestation-free” products would be allowed into the EU bloc.

What is the European Commission’s Proposal for a Regulation on Deforestation-Free Products?

The proposal would restrict imports only to “deforestation-free” products in order to fight consumer trends that drive deforestation around the world (also known as the FERC law). The regulation would apply to products produced within the EU and outside of it. The main regulation states that no deforestation or degradation can have taken place on the geographic coordinates of the land which the products were produced on. This key information will be used to determine whether the product is “deforestation-free” [1]. Six commodities were initially proposed to fall under the regulations: beef, wood, palm oil, soy, coffee and cocoa (and derived products such as leather, chocolate and furniture), because demand for these products in the EU is a main driver of deforestation [2].

Why is the EU acting on deforestation and why now?

Deforestation is the purposeful clearing of forested land and occurs most often in order to expand agricultural land. The IPCC estimates that 23% of anthropogenic greenhouse gas emissions originate from agriculture, forestry and other land-uses. More specifically, 11% of total emissions come from forestry and deforestation [3]. Deforestation is hence a key driver of global warming as well as biodiversity loss.

An area larger than the EU, at 420 million hectares, was deforested between 1990 and 2020 [2]. The EU is responsible for 10% of global deforestation through its demands for products frequently produced on land that has been expanded for agricultural purposes; and through its own production [4]. So, in October 2020, as part of its institutional prerogative, the European Parliament asked the Commission to propose a legislation halting global deforestation [5].

The Commission launched an Open Public Consultation and gathered more than 1.2 million responses, making it the second most responded to in EU history. The consultation showed overwhelming support from citizens to tackle deforestation [6]. As a response, the EU is targeting a supply and demand encompassing approach, of which the FERC law is a first step.

How will the regulation be implemented and monitored?

A due diligence process will require companies that are placing relevant commodities on the market to submit a statement to authorities proving that their products are compliant with EU rules. Two rules must be complied with: “(a) the products have not been produced on land deforested or degraded after 31^st December 2020; and (b) they have been produced in accordance with the laws of the country of production.” The level of monitoring for import operators will depend on the level of risk of the country, with stricter regulations on high-risk areas. Countries would be termed as ‘low’, ‘standard’ or ‘high’ risk, which will be decided based on the country’s rate of deforestation and the deforestation laws it enforces [1]. A three step approach will be implemented to ensure due diligence by import operators:

1. Standard information of the commodity, quantity, supplier and country of production are required. In addition, geographic coordinates of the plots of land on which the commodities were produced need to be provided. The plot of land will be monitored via satellite images;

2. The information on the plots of land will be analysed to evaluate the risk in the commodity supply chain for deforestation;

3. Adequate and proportionate mitigation measures will have to be taken by companies [1].

What position has the European Parliament adopted on the proposal?

The European Parliament voted in favour of the proposal on the 21^st of September with 453 votes in favour, 57 against and 123 abstentions. The Parliament reviewed suggested changes brought forward by the Members of the European Parliament (MEPs), and accepted several of these amendments [4]. The list of commodities from the initial 2021 proposal has been expanded to include pigmeat, sheep and goats, poultry, maize, rubber, charcoal and printed paper products. The regulation was initially set to be reviewed every two years, but the Parliament voted for an annual revision of the law. The financiers of production chains were included along with producing companies. European banks and investors will not be able to finance deforestation and human-rights violations. Special attention was paid to micro-enterprises, and the difficulty they will face in adhering to the new rules with minimal resources. Hence the Parliament has requested more assistance for these small producers. Finally, this proposal ensures that Indigenous Peoples must give their consent for commodity production close to their lands and for the product to be imported into the EU [7].

What impact will the regulation have and how will its uptake be supported?

The Commission estimates a reduction of 31.9 million metric tons of carbon emissions as a result of the law being adopted, which translates to savings of €3.2 billion annually. The costs of due diligence and compliance by companies were calculated to be lower than the expected economic savings. Long adaptation periods are outlined to ensure that adaptation to these changes is feasible [1]. Forest partnerships have been proposed to aid partner countries in improving governance and creating socio-economic opportunities [8].

Pro’s of the proposal

Successful use of public consultation, and utilising the amplification of EU citizens’ voices for more stringent regulations;
Addresses both legal and illegal land use through adhering to the country of production’s laws as well as EU law;
Inclusion of human-rights protection and Indigenous Peoples’ consent;
The expansion of commodities included;
Setting international precedent with an economically beneficial regulation on a high emission supply and demand chain.

Con’s of the proposal

The land-type to which the regulations will apply is limited to just natural forests, ecosystems such as wetlands and grasslands have not been considered;
A proposed remediation fund for forest communities that are most affected by deforestation was rejected by the parliament [9];
The definition for forest degradation is limited and is only referred to as qualitative land-use change from coordinates of land. A robust risk assessment of regions and emphasis on evidence for the supply base of the products would strengthen the implementation of the proposal [10].

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EU Proposal On Deforestation Free Products

What is the European Commission’s Proposal for a Regulation on Deforestation-Free Products?

Why is the EU acting on deforestation and why now?

How will the regulation be implemented and monitored?

What position has the European Parliament adopted on the proposal?