Why the Global South is against the EU’s anti-deforestation law

Ambassadors from 17 countries described the EU regulation on deforestation-free products (EUDR) as an “inherently discriminatory and punitive unilateral benchmarking system that is potentially inconsistent with WTO obligations” in a letter sent to EU Commission and Parliament officials earlier this month.

The signatories — from Argentina, Brazil, Bolivia, Colombia, Dominican Republic, Ecuador, Ghana, Guatemala, Honduras, Indonesia, Ivory Coast, Malaysia, Mexico, Nigeria, Paraguay, Peru, and Thailand — called for a change to the legislation and “open dialogue” about possible mitigation measures, in particular to help small and medium-sized companies.

The EUDR, which entered into force in late June, establishes specific criteria about traceability, certification and customs procedures for products that enter the EU internal market to bar imports of products that lead to deforestation or forest degradation.

Operators and traders have 18 months to adapt to the EUDR rules, with a longer adaptation period for micro and small enterprises.

The new classification system

“The legislation is unilateral, as it was created without an effective dialogue with producer countries and without being supported by any agreement negotiated at international level,” Pedro Miguel da Costa e Silva, Brazil’s ambassador to the EU, wrote to Euronews.

“We are partners with the EU in various multilateral environmental forums and at the WTO. We were hoping for a more cooperative approach,” he added, stressing that Brazil is “the EU’s largest external supplier of agricultural products”.

He deplored the new classification system on which the law depends which he said focuses mainly on agricultural products and which sorted countries into risk categories — high, low, and standard. This, he said, imposes differentiated conditions for access to the European market.

For Indonesia, one of the world’s largest exporters of wood products, palm oil, cocoa and coffee, the EU’s law disregards these countries’ efforts to balance nature conservation with people’s livelihoods and fails to provide them with adequate access to expertise, financial and technical assistance.

“With this unilateral benchmarking system, the EU will give a stamp to any country whether the country is the proponent of environment or the opponent, disregarding to some extent its efforts to combat climate change and deforestation in its region,” Andri Hadi, Indonesia’s ambassador to the EU, said.

“The EU’s one-size-fits-all approach as adhered to by the EUDR does not take into consideration the differences and specificity of each country, whether it be the flora, fauna or its people and its traditions,” he added.

The letter even goes as far as suggesting that the legislation will not only be ineffective in its efforts to protect forests worldwide but will have collateral damages such as increased poverty, diversion of resources and hindrance of the attainment of the United Nations’ Sustainable Development Goals by 2030.

The European Commission is aware of the concerns but rejects the discriminatory label, as “it will also be applied to domestic producers”, Daniela Stoycheva, a press officer for Virginijus Sinkevičius, the European Commissioner for Environment, Maritime Affairs and Fisheries, told Euronews.

“Therefore, it will be implemented in an even-handed manner that does not constitute arbitrary or unjustifiable discrimination for third-country producers, or a disguised restriction to trade. It was designed to be fully compatible with World Trade Organization rules,” she added.

EU unlikely to amend the law

The EU’s executive said dialogue is going to be enhanced, both bilaterally and in multilateral fora and, in the case of Indonesia and Malaysia, through a dedicated Task Force.

But there is no doubt that Brussels institutions have no appetite to change the law.

“At this moment in time, the regulation is the law of the land in the EU and amending the regulation would require a lengthy process of the EU’s ordinary legislative procedure – a prospect that is currently not on the cards,” David Kleimann, a political analyst at Bruegel think tank, told Euronews.

“The European External Action Service is currently heavily engaged in communicating the compliance requirements of the regulation at the WTO and in the countries that are most affected. The question is really whether the EU can put in place sufficient flanking measures to keep compliance costs for small and medium enterprises low,” he said.

The European Parliament, one of the driving forces for more ambitious EU policies to fight climate change, is also not keen on the idea as forests are essential for carbon dioxide storage.

For Bernd Lange (S&D, Germany), chair of the parliamentary International Trade Committee, the law “sends a clear message to the world that we are ready to take responsibility and actively work on solutions.”

“All of this can only happen in true partnership. Pointing fingers and lecturing will not help at all and is not the European approach.”

“In (the) legislation itself, there is an emphasis on acting together. For example, we have established a task force with Indonesia for the joint implementation of legislation, and we have discussed joint implementation and certifications in Brazil, where we have also set up a global gateway project for traceability,” Lange added.

Could this be headed for WTO arbitration?

The main driver of global deforestation is the expansion of agricultural land and the topic fuels highly intense political debate, including in the EU, as displayed during the recent Nature Restoration Law debacle that pitted environmentalists against farmers.

With this law, the EU, a major consumer of agricultural commodities, not only wants to reduce its commercial role in forest destruction but also prove its climate commitments to the world. Global partners, however, are warning that the EU needs to be more diplomatic in its endeavours, especially as it needs to bolster alliances if it wants to become less dependent on certain countries, such as China, for critical natural resources.

Indonesia’s ambassador called for any “trade disruption” to be avoided, adding that “bringing the case to WTO for the time being is too early as the regulation is not yet implemented”. He said, however, that “it stands as an option and a last resort”.

His Brazilian counterpart said that they “expect the EU to be open to effective and real dialogue, on equal terms, with producer countries, which includes regulating legislation in a reasonable way, recognising the sustainable production practices of producer countries”.

“It should be extremely careful in the process of classifying products and countries. Reality will not adapt to legislation. It is the legislation that needs to take into account and adapt to a very complex and diverse reality,” he added.

For Kleiman, the analyst, “the letter should be viewed as a desperate cry for help that the EU should take very seriously” in order to appease the fact that it put forward a “unilateral” regulation that would violate the non-discrimination obligations under WTO law.

Still, he added, a WTO process is unlikely to bring much to the plaintiffs as “WTO GATT general exception for policies that are effective in protecting exhaustible natural resources from depletion”.