EUDR: Reasons the EU has taken action

And how the international community has responded

“We are aware that certain industry associations, third countries and even agriculture ministers from EU Member States are criticising the EUDR or certain aspects of it, risking undermining it, despite years of research, consultation, and an open, and transparent legislative process. We urge you to protect the integrity of the EU democratic decision-making process and to ensure that the EU stands firm in pursuing the objectives set out in the EUDR.”

These strong words are taken from the open letter signed by +170 NGOs in support of the EU Deforestation-free Regulation and addressed to President Ursula von der Leyen. In this article, we explore how EUDR is dividing the international community and why it was issued in the first place.

The importance of forests

Forests offer a large range of environmental, economic and social benefits that are fundamental for human life. They protect entire ecosystems, provide clean air and prevent biodiversity loss, along with playing a vital role in water retention, purification and recharge. Forests are also responsible for the subsistence and income of one third of the world’s population.

Deforestation and forest degradation have serious consequences not only on the global climate crisis, by reducing carbon sinks and altering water cycles, but also on the livelihoods of vulnerable communities, including local inhabitants and indigenous people and drive biodiversity loss.

Therefore, it is alarming to witness that this phenomenon is taking place at a breakneck rate. According to the Food and Agriculture Organization of the United Nations (FAO), between 1990 and 2020 an estimated 420 million hectares of forest, an area larger than Europe, has been lost worldwide. In a more recent study conducted by FAO, it has emerged that the world has lost an average of 5 million hectares of forest per year from 2015 to 2020. On top of that, due to increases in global consumption, the deforestation rate is expected to rise even further in the upcoming years.

Why is Europe acting to mitigate deforestation?

Given that the European Union is one of the biggest market players in global consumption, the Parliament decided to regulate the commercialisation of commodities whose production is linked to deforestation and forest degradation by extending the already-enforced EU Timber Regulation (EUTR), whose focus was to ensure the legal harvest of timber products on the EU market, to other products like palm oil, soy, cocoa, coffee, cattle and rubber, and require deforestation-freeness additional to legality.

This marked the birth of the EU Deforestation Regulation (EUDR), intending to reduce the impact of products purchased by Europeans on the world’s forests and wooded areas, ultimately cutting down greenhouse gas emissions and biodiversity loss.

Reactions from member states

The reception of the EU Deforestation-free Regulation within the European community has been somewhat mixed, leaning towards a general dissatisfaction of the member states.

This comes as a surprise, as the EU Deforestation-free Regulation is the result of months of negotiations and collaboration among the member states, the EU Commission and Parliament, as well as scholars and industry experts, a general effort that brought to EUDR inception in June 2023.

In March 2024, Austria filed a motion to the European institutions addressing the need to change the regulation, initially endorsed by Finland, Italy, Poland, Slovakia, Slovenia, and Sweden and gained a foothold among 20 of the 27 member states. The requests were mainly two. First, a strong reduction of the EUDR requirements within the internal market for small and medium-sized farms and producers in low-risk countries. And second, the postponement of the implementation deadline, now fixed to 30th December 2024. The Austrian deputies motivate the requests listing several reasons. The main ones are:

  • The increased bureaucracy would require an excessive administrative effort from small- and medium-sized companies in the European agricultural sector.
  • The regulation may impede the EU’s organic sector growth.
  • The EUDR definition of forest comprises also areas that in the new scenario would be encouraged to restrict and hamper sustainable pasture management.
  • A substantial decrease in soy production could follow, leading to increased imports from non-EU markets, unequally regulated.

The Austrian Minister for Environment has declared the Austrian proposal unofficial, as it was an initiative developed exclusively by the Agriculture Ministry. Other actors pointed out how the arguments lack coherence and that any change to the current official text would irremediably weaken the effect of the regulation.It is unclear how the European Commission will respond. However, it is undeniable that the agricultural sector has a broad and powerful influence in Europe. Consider that last February, when the European Commission issued the new CAP 2023-27, thousands of trucks flooded Brussels, eventually obtaining a simplification and reduction in the impact of the policy.

Reactions from non-EU countries

The international community has expressed strong criticism regarding the application of EUDR. The objections came especially from the leading producers of the commodities affected by the Regulation, such as Malaysia, Indonesia, and Brazil.

Indonesia, in particular, has warned that large companies might have the resources to implement the EUDR requirements, but smaller companies would face tremendous barriers, technological and financial ones being at the top of the list. Therefore, the country tried to obtain the same deadline provided to EU-based SMEs – now fixed to June 2025 – also for the SMEs in producing countries. The EU declared that SMEs will be granted a longer adaptation period, but to this moment more details cannot be provided.

Producing countries have also pointed out that EUDR could have a severe impact on worldwide trade, despite being an initiative originating solely from Europe. However, if someone would like to see the glass half full, this might be the very first step to transforming global supply chains while making sure to protect the environment.

The most worrying issue is that the anticipated annual compliance costs for companies under EUDR are estimated to range from US$170 million to US$2.5 billion globally, which will be absorbed by a reduction in operators’ profit or passed on to the final consumers.

NGOs rally in support of EUDR

Supporters of the Regulation have made a move against the member states, producing countries and industry associations – that claimed the arduous feasibility and economic downsides of EUDR – by signing a digital letter addressing the President of the European Commission, Ursula von der Leyen. Over 170 NGOs signed it to reiterate the need that the landmark legislation must come to life and that the EU must continue seeking the prevention of deforestation, by defending the proposed law and what it stands for.

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Response to criticism from European institutions

This March, the EU Commission organised a tour in South America intending to provide the producing countries with some answers, visiting Paraguay, Bolivia and Ecuador. Some of the points recurring as favourable arguments to reassure the trade partners that EUDR is feasible and should not be stigmatised are that:

  • The responsibility of legal compliance falls mainly on the shoulders of big organisations and not on smallholders, who are only required to provide geolocation data and documentation as part of the operators’ supply chains.
  • Geolocation data can be collected through a smartphone and there are already several online resources with instructions.
  • The EU Deforestation-free Regulation does not require any certification, precisely to avoid futile costs on small-holders.
  • Producers that comply with EUDR would have a competitive advantage compared to their peers.
Aerial view on deforested area surrounded by trees - Pexels Aleksey Kuprikov 1883853 3551209

Will EUDR work in preventing deforestation?

It is very difficult to say. The reasons behind deforestation and forest degradation are intricate and vary depending on the location. The main drivers for deforestation are commercial and local or subsistence agriculture, mining, infrastructure extension and urban expansion. On the other hand, forest degradation is mainly pushed by logging, fires, overgrazing in forests, fuel wood harvest and charcoal production.

However, direct causes are linked to a complex array of underlying factors, including a range of political, cultural and socio-economic conditions. In particular, the global market for illegally sourced timber is worth $152 billion a year, ranking third among the criminal sectors after drugs and counterfeit goods.

Although EUTR and FLEGT generated positive results in terms of increased stakeholder involvement, enhanced forest management practices, and improved forest governance in third countries, according to the EUDR official text, “the objectives of the two Regulations [EUTR and FLEGT] – namely to curb illegal logging and related trade, and to reduce the consumption of illegally harvested timber in the Union – have not been met and it was concluded that focusing solely on legality of timber was not sufficient to meet the set objectives.”

In this respect, EUDR extended the scope of EUTR to other commodities and their derivatives, and included deforestation-freeness as a core requirement. In addition, compared to the EUTR, the EUDR provides a clearer framework for its implementation to the member states, which hopes for more structured monitoring efforts. Thus EUDR appears to be more capable and powerful in fighting deforestation, but the overall outcome will depend on how it is going to be implemented worldwide. 

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If you want to learn more about how RADIX Tree can help you navigate EUDR compliance, you can either click on this link to find immediately more information or you can reach out to us by filling in the “Request a Demo” and specifying your needs in the message so that we can select the most appropriate expert to get back to you, based on your requirements.