The zero-deforestation provision is the most controversial provision in the European Green Deal because of the severity of its impact on countries exporting goods to the continent.

The news that the EUDR may be postponed brings good news to agricultural exporters from European partner countries. Photo: AFP/TTXVN

The international campaign that Indonesia and many developing countries have launched over the past two years to oppose the European Union’s Deforestation-Free Regulation (EUDR) on agricultural imports may achieve its goal, the Jakarta Post reported on October 1.

The EUDR, which was scheduled to come into effect on December 30 this year, may be delayed due to strong opposition not only from developing countries but also from EU member states and the United States. The EUDR is essentially one of the main contents of the European Green Deal, a set of policy initiatives adopted by the European Commission (EC) in 2021 to bring the bloc to a carbon neutral target by 2050.

The latest and strongest opposition was raised on September 25 by 29 associations of traders, farm producers, civil society organizations and even European newspaper publishers. Accordingly, the group requests a postponement of the implementation of the EUDR and the provision of all necessary compliance tools with sufficient time to prepare adequately.

The organizations making the demands in the Joint Statement issued in Brussels are: the Association of Oilseeds, Cereals, Olive Oil, Oils and Fats, and Feed Traders COCERAL; Farmers and Agricultural Cooperatives Copa-Cogeca; Forest Owners CEPF; Landowners ELO; State Forest Association EUSTAFOR; and newspaper publishers ENPA.

The Joint Statement asserts: “Companies are already facing difficult uncertainties in negotiating contracts for next year. The consequences could be severe market disruptions, causing heavy losses for major European producers. This would cause serious damage to European producers and downstream industries, and threaten the security of supply chains, reducing market access for important EU food, feed and forestry products.”

Over the past year, regulators and traders around the world have repeatedly voiced concerns about the practical feasibility of the EUDR. Many trade associations have even criticized the regulation as a discriminatory trade policy, especially for developing countries.

On September 23, Reuters published a commentary by London-based expert Afiq Alias, stating that the EUDR would create an ambiguous trade future and even risk leading to a “burnout policy”. The article cited the US, China, Brazil, Australia, and some EU countries such as Germany, Italy, Sweden and African countries as having strongly opposed it, requesting a delay in the implementation of the EUDR.

Impact of EUDR on Indonesia's agricultural exports

Indonesia, the world's largest palm oil producer and a major producer of rubber, timber, cocoa and coffee, will certainly be the country most affected by the EUDR.

The EUDR will apply to agricultural products, namely wood products, livestock, palm oil, soybeans, coffee, cocoa and natural rubber. Meanwhile, vegetable oils such as rapeseed, sunflower, linseed, olive and others widely produced in the EU are exempted from the regulation.

Reuters noted that the EU is already facing the risk of shortages of some key commodities. Some companies have started to stockpile coffee. The latest export data shows that Indonesia's palm oil exports to Europe have fallen by 37% since the beginning of the year.

Under World Trade Organization (WTO) rules, rapeseed, sunflower, olive, linseed and other edible oils are all agricultural commodities similar to vegetable oils and must be treated equally without discrimination. However, palm oil has been separated from all vegetable oils under the EUDR.

The EUDR would prevent goods that can be traced to deforested land from entering the EU. Notably, the EUDR would create a complex and difficult-to-enforce set of requirements. Farmers would have to provide the coordinates of their plots of land for a European customs officer to inspect using satellite imagery. Adding red tape to a largely informal market would be costly and time-consuming.

The biggest concern for the Indonesian government and the Indonesian Palm Oil Association (Gapki) is that to prove the legality and deforestation-free status of their products, producers, including smallholder cooperatives, must conduct due diligence, generating dozens of sets of information. Given that smallholder farmers own about 40% of the country’s 16.5 million hectares of oil palm land, due diligence will be difficult and time-consuming.

However, with the possibility of delaying the implementation of the EUDR green policy, Indonesia should not be complacent about its progress in preventing deforestation. The government, the private sector, and farmers should demonstrate a stronger commitment to upholding and adhering to sustainable standards in the development and management of natural resources.

The decision to postpone the EUDR was absolutely correct.

The delay in the implementation of the EUDR most likely reflects the shortcomings of the EUDR legislative process, especially in engaging affected parties, especially domestic users and producing countries. It also reflects the failure of the potential consequences and unintended impacts of the regulation on EU producers and processors.

The delay in the EUDR was inevitable due to many factors, but the most important issue is the lack of preparedness of the EU administration to implement the law without clear guidance. A delay in the implementation of this regulation would allow both producers and consumers to adapt better, comply with clearer mechanisms and requirements.

The EUDR is considered one of the most controversial regulations in the European Green Deal because of the severity of its impact on producing countries, which were not properly involved or consulted. Then there is the impact on EU producers and users.

A successful European Green Deal would set an exemplary example that would have a positive and tangible impact on the global movement to combat climate change. However, such a lofty goal must be pursued in line with global commitments, in particular the Sustainable Development Goals (SDGs) and the principles of fair and free trade to ensure global support. Drawing on the lessons of the EUDR, the policy-making process should be conducted in a more cautious and consultative manner.

Source: Bnews