Canadian natural resources regulators say they are concerned the EU deforestation regulation (EUDR) will create trade barriers for Canadian wood exports.
Natural Resources Canada (NRCAN) told Argus Canada shares EU's desire to address deforestation globally and recognized the scope and scale of the EU's goals toward deforestation-free supply chains. But parts of the EUDR's definition of "forest degradation" are "not consistent with best practices for regeneration as applied in Canada, where planting of native species and natural regeneration are integral to sustainable forest management," NRCAN said.
"Canada is concerned that compliance measures proposed will result in barriers to trade for Canada, and are contrary to the spirit of the Canada-European Union Comprehensive Economic and Trade Agreement," NRCAN said.
EUDR stipulates that for products that contain or have been made using wood, they will be deemed deforestation-free only if the wood has been harvested from the forest without inducing forest degradation after 31 December 2020. It defines forest degradation as structural changes to forest cover, including turning natural, primary forests into planted forests or plantation forests.
Planted forests are defined as forests where more than 50pc of the growing stock at maturity are trees established through planting and/or deliberate seeding. A plantation forest is a planted forest that is intensively managed and meets other criteria.
The typical practice in Canada for managed forests is to replant the same species which populated the forest before harvest. That constitutes forest degradation under current EUDR definitions, but it is considered a sustainable practice that protects biodiversity, an industry source with knowledge on the matter told Argus.
There is no internationally accepted definition of "forest degradation" by countries or by major international bodies such as the Food and Agriculture Organization of the United Nations (FAO).
"Without an accepted definition or consistent reporting methodology, it is unclear how degradation will be verified in a measurable, consistent way by EU operators or their suppliers," NRCAN said. The Canadian Council of Forest Ministers had recently agreed to a working definition of forest degradation to demonstrate the country's commitment to sustainable forestry practices.
The EUDR sets due diligence rules for companies exporting or placing on the EU market wood products among other commodities. Companies must ensure that products sold in the EU have not caused deforestation or forest degradation, otherwise they would be assessed a maximum fine of at least 4pc of the total annual EU turnover of the non-compliant operator or trader.
Canada has also expressed concerns to EU authorities over several uncertainties around how the regulation will be enforced and the country benchmarking process. Implementation guidelines on the EUDR implementation are yet to be published by the European Commission, even though operators for most wood product categories, including woody biomass used as fuel such as wood pellets and chips, will be required to comply from 30 December 2024. All countries are temporarily classified as standard risk, until the European Commission finalizes its assessment of countries as high, low and standard risk, by 30 December at the latest.
The Canadian government's requests were "treated favourably" although "with circumspect" in a meeting with the European Commission held in recent weeks, the industry source said, adding that the commission was expected to address such requests and how related EUDR provisions can be interpreted in a renewed Frequently Asked Questions (FAQ), expected to be published imminently.
The Canadian government has adopted a diplomatic and conciliatory approach in voicing its concerns over EUDR with the European Commission, rather than bringing up a trade dispute under existing treaties, they said.
The US government has urged the commission to delay EUDR implementation in a letter sent in late May. European industries have also voiced concerns and urged the commission to clarify various implementation aspects.
