Traders of many agricultural commodities face additional compliance burdens when selling in the EU, with the European Commission likely to publish next week a proposal for a regulation aimed at minimising the risk of deforestation and forest degradation from products sold in the bloc.
A leaked draft shows that palm oil, soy, beef, timber including fuel wood and pellets, cocoa and coffee will be allowed for sale in the EU only if they are "deforestation-free" and have been produced in accordance with the laws and regulations of the country of origin. Operators have to exercise "due diligence" prior to selling the listed commodities and products, and the regulation also sets out a "due diligence system". Operators can mandate an authorised representative. Maize and rubber have been left out of the draft.
The commission wants member states to lay down a system of "effective, proportionate and dissuasive" penalties, which should include confiscation of relevant commodities or products and of revenues gained by the operator or trader. Commodities and products are listed by the EU combined nomenclature.
Last October, the European Parliament voted for legislation preventing imports linked to deforestation of a wider list of commodities including "at least" rubber and maize as well as palm oil, soy, meat, leather, cocoa and coffee. Parliament could well follow that vote again and push to amend the commission's proposal, including "intermediate or final" products derived from the above commodities. Parliament also pointed the finger at deforestation from EU consumption of cotton, sugar cane and rapeseed.
Unlike the commission, parliament wants to ban deforestation-linked imports of pork and poultry as well as beef. France has led countries calling for an EU strategy to combat imports linked to deforestation.
Greenpeace EU called the draft "a groundbreaking law," but its agriculture and forest campaigner Sini Erajaa said a lot "depends whether the potential loopholes go through or not. "I hope the commission removes those loopholes that leave out key commodities like maize, rubber but also derived products." Erajaa said a loophole may arise from the regulation individually listing derived products rather than via a more general clause, for instance by listing soy but not soy oilcake and other solid soy residues.
Another limitation is the sole focus on deforestation rather than other ecosystems like like Brazil's Pantanal for cattle, Cerrado for soy and Indonesia's peatlands for palm oil and pulpwood, Erajaa said. A first review, proposed after at least five years, would evaluate the need and the feasibility of extending the regulation.
The leaked 96-page impact assessment that will accompany the regulation notes that maize and rubber account for the "smallest fraction of embodied deforestation" even if their trade volumes are very large.
"Including these two commodities would require a very large effort with little return in terms of curbing deforestation driven by EU assumption," the commission said.
The regulation does not mention specific countries or regions like the Amazon, even if it does allow operators from countries to be assessed by the commission as "low-risk" to apply simplified due diligence. The impact assessment refrains from marking specific regions, noting that around 80pc of deforestation is "currently driven by the expansion of agricultural land and the demand for commodities and products such as soy, beef, palm oil and wood".
The draft regulation would allow the commission to classify countries as high-risk, thereby falling under "enhanced scrutiny". Brazil is very much in EU policy-makers' eyes, and the commission is not pushing ratification of a free trade agreement with the Mercosur trading bloc — Argentina, Brazil, Paraguay and Uruguay — without results on combating Amazon deforestation. Attention has only been reinforced by a new report outlining a 9.5pc rise in Brazil's greenhouse gas emissions in 2020, with emissions from land-use change hitting 998mn t of CO2e in 2020.
