Intense negotiations underway on EU “deforestation free” law

Intense negotiations continue within the European Council and European Parliament towards agreement of a final text of the law "on the making available on the Union market as well as export from the Union of certain commodities and products associated with deforestation and forest degradation".

If jointly approved by the Council and Parliament, the new law will replace the existing EU Timber Regulation (EUTR) and extend due diligence obligations to a wider range of "forest risk" commodities. As currently drafted, it would prohibit placing of products on the EU market that contribute either to "deforestation" or to "forest degradation", alongside illegally harvested products.

On 17 March the European Council of Environment Ministers exchanged views on the legislative proposal. The meeting included clarifications and justifications for the regulation from the European Commission (EC) followed by a short statement by each Member State in turn. The EC identified aspects of the regulatory proposal setting it apart from the existing EUTR and from equivalent legislative initiatives in the US and UK. If passed by the EU the law will:

• Build on FAO definitions of deforestation and degradation.
• Include a prohibition on products derived from any deforestation or forest degradation, irrespective of whether legal or illegal according to national laws in the country of harvest.
• Require operators to file each year a due diligence statement to be uploaded into an EU digital database to allow better targeting of enforcement actions.
• Require that the source of all regulated products - excluding only those from countries deemed by the EC to be "low risk" – be traced to the "geolocation", defined as the specific plot of land where harvesting took place.
• Set out procedures for benchmarking of countries as "high risk", "standard risk" and "low risk" by the EC for which different due diligence obligations would apply and which thereby "provide an incentive for countries to step up their protection of forest".
• Establish minimum requirements for enforcement actions by EU Member States to better ensure uniform implementation across the EU and a level playing field for operators.

In the same way as EU Agricultural Ministers speaking at their earlier Council meeting in February, Environment Ministers expressed a wide range of views on the legislation.

The most supportive statements came from the German and Dutch Environment Ministers. Germany said the proposed regulation would pay for itself in the long term and be an important improvement over the EUTR and that it contained appropriate measures to reduce the burden on SMEs.

The Netherlands Environment Minister expressed his "full support for the proposal" and said that it is "vital to the green deal" (the EU objective to cut greenhouse gas emissions by at least 55% by 2030). The Netherlands also called for "other ecosystems to be introduced as soon as possible" and that it is "key that forest degradation remains part of the proposal". Netherlands said there should be deeper engagement with major producer countries to "avoid negative impacts such as discrimination against smallholders and rising costs".

Ministers raising the most substantive concerns about the draft legislation came from the Nordic countries and Baltic States. Sweden said that the administrative burden and costs of the new legislation would be significantly higher than was the case for EUTR. Sweden believes the legislation does not sufficiently reflect varying national forestry conditions both within and beyond EU and that definitions relating to degradation and sustainable forest management are unclear and likely to conflict with national forest policies. Sweden recommended that these definitions either be removed or deleted and called for more steps to ensure full compliance with WTO obligations.

Finland emphasised that deforestation is a global problem and the EU should focus on promoting a multilateral response. Also that due diligence must be justified in relation to impact and proportionality and that the geolocation requirements be examined more closely from the perspective of practicality.

According to Finland, the degradation definition created "many difficult questions", particularly for countries with a large remaining forest area where legitimate changes of land use may be associated with some minor losses to forests at specific locations.

Estonia noted that the new law will have a significant impact on EU businesses, particularly SMEs, and regulatory authorities. According to Estonia, discussions in various EU working groups on the regulation had been too rapid leaving insufficient time for proper consideration to be given to the full implications of the new law. Estonia called for more wide ranging input from experts from the individual commodity sectors and in trade law. Estonia noted that sourcing of wood from illegal sources has remained a problem despite EUTR, and that bringing cases to court has been challenging. Estonia believed that definitions, particularly for "forest degradation", must only contain concepts agreed at international level.

Some Southern European countries, while expressing broad support, also raised specific substantive objections. For example Italy said the scope of the draft law extends well beyond EUTR and will be challenging to implement and called for "reasonable time frames" before full implementation. According to Italy, more time is needed to develop "effective new platforms to link together operators" and "new innovative tools, including partnerships with private entities". Italy also suggested that existing FLEGT partnerships should be developed before coming up with new partnerships. There was a need too for more consideration to be given to interim arrangements when switching from EUTR to the new regulation.

Greece was particularly emphatic that the new regulation must be in line with WTO rules, must take account of national conditions and natural processes such as forest fires, must be transparent and simple and implemented in harmonised way. Greece said that due diligence requirements should be precise and consistent with international standards such as OECD guidelines to minimise costs. Greece felt the "forest degradation definition should be kept out of the regulation allowing countries to adopt national provisions".

Source:  ITTO/Fordaq