The Council and the European Parliament have reached a provisional deal on a proposal to minimise the risk of deforestation and forest degradation associated with products imported into, or exported from, the European Union.
- EU agrees new rules on banning trade in deforestation (and forest degradation) associated products.
- The agreement addresses the expansion of agricultural land into forest and structural changes to forest cover.
- EU action may be belated but aligns with the spirit of COP15.
The main driver of global deforestation and forest degradation is the expansion of agricultural land, which is linked to the production of the commodities included in the scope of the regulation. As the EU is a major consumer of such commodities, it can reduce its impact on global deforestation and forest degradation by making sure that products imported and exported into the EU, and their related supply chains are ‘deforestation-free’.
The agreement aligns with many of the elements under discussion for the post-2020 Global Biodiversity Framework, currently being debated at COP15. Not only does it ban products derived from deforestation and forest degradation, but it allocates level of risk by country, sets out traceability requirements and obligations. Critically it also takes into account human rights aspects linked to deforestation, including the right to free, prior and informed consent by indigenous peoples.
The provisional agreement sets mandatory due diligence rules for all operators and traders who place, make available or export the following commodities from the EU market: palm oil, beef, timber, coffee, cocoa, rubber and soy.
The rules also apply to a number of products which are derived from deforestation or forest degradation. These include chocolate, furniture, printed paper and selected palm oil based derivates (used for example as components in personal care products). A review will be carried out in two years to see if other products need to be covered and, of course, the agreement is provisional pending formal adoption in both institutions.
Setting the time limits for deforestation free products
The cut-off date of the new rules is 31 December 2020, meaning that only products that have been produced on land that has not been subject to deforestation or forest degradation after 31 December 2020 will be allowed on the Union market or to be exported.
The Council and Parliament agreed a definition for deforestation, based on a definition from the Food and Agriculture Organisation (FAO). It also includes what’s considered an innovative concept for the definition of ‘forest degradation’ meaning the structural changes to forest cover. It is being defined the conversion of naturally regenerating forests and primary forests into plantation forests and other wooded land and the conversion of primary forests into planted forests.
Due diligence will require traceability programmes
Stringent due diligence obligations have been put in place for operators, which will be required to trace the products they are selling back to the plot of land where it was produced.
The new rules are intended to avoid duplication of obligations and reduce administrative burden for operators and authorities. It will also allow smaller operators to rely on larger operators to prepare due diligence declarations.
Benchmarking performance will increase transparency on risk
The Council and Parliament agreed to set up a benchmarking system, which will allocate a level of risk to third party and EU countries in terms of deforestation and forest degradation (low, standard or high).
The risk category that will determine the level of specific obligations for operators and member states’ authorities to carry out inspections and controls. It is also expected to facilitate an enhanced monitoring for high-risk countries and simplified due diligence for low-risk countries.
The Council and Parliament also tasked the competent authorities to carry out sampling checks, which vary in stringency according to the level of risk in the country. This will mean checks on 9% of operators and traders trading products from high risk countries, 3% for standard-risk countries and 1% from low-risk countries, in order to verify that they effectively fulfil the obligations laid down in the regulation.
In addition, competent authorities will carry out checks on 9% of the quantity of each of the relevant commodities and products placed, made available on, or exported from their market by high-risk countries.
Reaching agreement on financial implications.
The agreement maintains the provisions regarding effective, proportionate and dissuasive penalties and enhanced cooperation with partner countries, as proposed by the Commission.
It says that fines proportionate to the environmental damage and the value of the relevant commodities or products concerned should be set at the level of at least 4% of the operators’ annual turnover in the EU and include a temporary exclusion from public procurement processes and from access to public funding.
Overall, once adopted and applied, the new law will ensure that a set of key goods placed on the EU market will no longer contribute to deforestation and forest degradation in the EU and elsewhere in the world.