EU Parliament votes for deforestation regulation

The European Parliament today approved a deforestation regulation that requires mandatory due diligence from operators and traders selling and importing cattle, cocoa, coffee, oil palm, soya, rubber and wood into the EU.

Also covered are derivative products that contain, have been fed with or made using cattle, cocoa, coffee, oil palm, soya, rubber and wood — such as leather, chocolate and furniture as well as charcoal, printed paper products and certain palm oil derivatives.

Firms must ensure products sold in the EU have not caused deforestation or forest degradation. The law sets penalties for non-compliance with a maximum fine of at least 4pc of the total annual EU turnover of the non-compliant operator or trader.

During the negotiations, the parliament said it successfully widened definition of forest degradation to include conversion of primary forests or naturally regenerating forests into plantation forests or other wooded land.

But Finnish green member of parliament (MEP) Heidi Hautala is still "looking forward" to upcoming reviews to include several elements in the parliament's position that were not reflected in the final legal text, notably enlarged scope beyond forests to other ecosystems and to financial institutions. "We also wanted more ambitious provisions on human rights," Hautala said.

"The new law is not only key in our fight against climate change and biodiversity loss, but should also break the deadlock preventing us from deepening trade relations with countries that share our environmental values and ambitions," centre-right EPP MEP Christophe Hansen said. Luxembourg lawmaker Hansen was the parliament's chief negotiator.

"This [deforestation regulation] can foster our trade relations with other economies as well as with Mercosur," Hansen told Argus, albeit noting resistance to trade agreements with partners that are "massively burning down forests to produce agricultural goods".

Citing deforestation in Brazil, the parliament previously voted for an amendment stating that the EU's free trade deal (FTA) with Mercosur countries — Argentina, Brazil, Paraguay and Uruguay — cannot be ratified. EU trade commissioner Valdis Dombrovkis cited the need for meaningful results on deforestation when suspending the process of ratification of the FTA with Mercosur.

The parliament and member states agreed provisionally on the deforestation law in December 2022. Following approval by EU ministers, entry into force will see all countries assigned a "standard" risk level. The European Commission will then benchmark countries within 18 months. The law sets a total of 9pc of operators and traders being subject to checks if importing products from "high-risk" countries.

EU vegetable oil and protein-meal industry association Fediol welcomed the EU regulation, but said certain provisions and the tight 18-month implementation timeline may pose a "significant" compliance problem.

"Companies alone cannot solve [compliance problems]," Fediol director general Nathalie Lecocq said. She said the commission, member states, producer countries and local authorities as well as operators, smallholders and supply chains must work together. Fediol wants the commission to issue commodity-specific and harmonised implementation guidelines by the end of 2023 at the latest.

By Dafydd ab Iago