EU Member States and the European Parliament recently agreed on the Regulation on deforestation-free products, which aims to promote the consumption of forest-friendly products and reduce the EU’s impact on global deforestation and forest degradation. The Regulation covers seven commodities (cattle, cocoa, coffee, oil palm, rubber, soya and wood), as well as many derived products such as meat, leather, chocolate, fuel wood, furniture, pulp and paper, and printed books. Under the Regulation, any operator or trader who places these commodities on the EU market, or exports from it, must be able to prove that the products do not originate from recently deforested land or have contributed to forest degradation.
With these new rules the EU aims to (a) avoid that the listed products Europeans buy, use and consume contribute to deforestation and forest degradation in the EU and globally; (b) reduce carbon emissions caused by EU consumption and production by at least 32 million metric tonnes a year; and (c) address both forest degradation and deforestation driven by agricultural expansion to produce the covered commodities.
From 2025 it will be prohibited to place relevant products on the EU market, or export them from the EU, unless they are: “deforestation-free”; produced in accordance with the relevant legislation of the country of production; and covered by a due diligence statement indicating no more than a negligible risk of non-compliance.
Further, for products that contain or have been made using wood, it means they were harvested from forests without inducing forest degradation after 31 December 2020. Forest degradation is defined as “structural changes to forest cover, taking the form of the conversion of primary forest or naturally regenerating forest into plantation forest or into other wooded land and the conversion of primary forest into planted forests”. This definition will be re-assessed after five years.
In particular, the inclusion of wood and the explicit reference to (and definition of) forest degradation has been a thorn in the eye of the Canadian government. In a letter to the EU, the Canadian government has stated that the rules add “burdensome” requirements and will hurt trade between Canada and the EU. In response to the Regulation the Canadian government is working on its own definition of forest degradation which will they hope will ensure continued access to Canadian wood and wood products for the European market.
While the European Commission is working on the adoption of a ranking system to list countries as low-, standard- or high-risk for deforestation and forest degradation, EU Member State governments will have by the end of this year to define the penalties for breaking the law and designate the national competent authorities responsible for enforcing it. These authorities must have “adequate powers, functional independence and the resources” necessary to properly perform their functions under the Regulation.
This means these authorities must have secure and stable access to the necessary resources; the powers necessary to enforce the Regulation; and must function independently. Furthermore Member States must ensure that national regulatory and institutional frameworks enable proper implementation and enforcement through effective, proportionate and dissuasive penalties; have adequate national administrative and judicial procedures in place; and ensure law enforcement procedures allow their competent authorities to independently carry out checks on operators and traders and take immediate action where products present a high risk of non-compliance.
And finally, the European Commission will consider, by mid-2024, whether to extend protection to wooded land other than forests, and by mid 2025 a review will consider whether to widen protection to other natural ecosystems, such as grasslands, peatlands and wetlands, as well as to regulate European financial institutions to prevent them from contributing to forest destruction, and to broaden the list of commodities and products covered by the law.
Wendel Trio
