The EU’s Environment Commissioner Virginijus Sinkevičius is touring Paraguay, Bolivia, and Ecuador this week to address concerns related to the implementation of the world’s first ban on deforestation-linked products, a measure criticised as protectionist by some of the bloc’s trade partners.
The rules, which contribute to EU efforts to achieve climate neutrality by 2050, will affect imports of cattle, cocoa, coffee, palm oil, soya, and wood, as well as many derived products like chocolate and leather.
“With the EU Deforestation Regulation entering into application at the end of this year, some of the countries affected are asking for discussions on the details, so I am answering that request,” Sinkevičius told reporters on Wednesday (13 March).
Companies seeking to place their products on the EU market will have to use geolocation data to demonstrate that these do not come from deforested or degraded land after December 2020, with businesses facing fines of up to 4% of their total annual turnover in the EU if they breach the regulation.
According to European Parliament data, the EU’s consumption is responsible for about 10% of global deforestation, of which two-thirds are accounted for by palm oil and soya.
Nevertheless, the groundbreaking legislation has faced fierce criticism from leading producers of these commodities, including Malaysia, Indonesia, and Brazil, who argue that the EU is leveraging trade policy to impose its green agenda on others.
Concerns have been raised about businesses’ ability to navigate Brussels-imposed bureaucracy in developing countries, as well as about the associated costs of verifying that commodities have not been sourced from deforested land.
Countries oppose “trade-distorting rules”
Sinkevičius will start his trip on 15 March in Paraguay, a country that has been particularly vocal against adopting the new EU regulation.
In an effort to ease the concerns, Sinkevičius is set to underscore the EU’s support in establishing a traceability system to facilitate compliance, partly funded with €10 million from the bloc, in addition to funding from other anti-deforestation initiatives.
“My intention is to calm down any fears about the possible consequences and underline the advantages for all the countries concerned,” Sinkevičius stated.
Paraguay was among the countries that explicitly criticised “unilateral, trade-related environmental measures” that could lead to distortions during last month’s World Trade Organisation ministerial conference in Abu Dhabi.
“As a landlocked developing country, the answer is simple: more trade and less protectionism,” Patricia Frutos, the country’s deputy minister for economy, said in Abu Dhabi.
However, the Lithuanian Commissioner voiced hope that other countries would follow suit and adopt policies similar to the EU’s.
“Right now, it’s the most ambitious piece of legislation on deforestation anywhere in the world, but we hope it doesn’t stay that way – we hope that many other countries will soon follow in its footsteps,” he emphasised.
Potential delays
Sinkevičius acknowledged that the Commission is still finalising the regulation’s details, including a traffic light system to categorise countries based on their risk level of deforestation, which will determine the level of import checks.
The Commissioner declared that they are collaborating with stakeholders on the development of a methodology for benchmarking, aiming for it to be “as objective and transparent as possible.”
“All the work is done in very close cooperation with third countries, and those efforts will continue for as long as they are needed,” Sinkevičius added.
Countries have expressed concerns about the bad reputation associated with a “high risk” label, fearing that it could lead companies to cease operations in these regions or favour large producers over small farmers, who may struggle to comply with the new regulations.
A joint letter sent last September to EU authorities, signed by Indonesia, Brazil, and 15 other countries, described the benchmarking system as “discriminatory and punitive,” with the potential to breach international trade rules.
In the face of the strong criticism, the EU executive appears to be delaying the release of the classification, leaving the decision to the next Commission, which will assume office after the summer, following June’s EU elections.
Reuters reported that the Commission is considering postponing the release of risk ratings until 2025, with all countries being designated a “medium” level of risk until the methodology is implemented.
