The European Union is one of the largest importers of commodities linked to deforestation, with more than 60% of the world’s cocoa and about 50% of coffee going to Europe alone in 2016. These are two of seven agricultural commodities that resulted in over a quarter of global tree cover loss from 2001 to 2015.
A draft regulation can help prevent products that cause deforestation or forest degradation from entering the EU market — especially if policymakers strengthen the plan in a few key ways.
What Could the EU's Deforestation-free Products Regulation Achieve?
With the introduction of broad and innovative regulatory measures, the draft legislation sends an important signal to countries and companies involved in producing, importing and trading forest-risk commodities: The laws of major markets are finally catching up with the long-recognized need to decouple commodity production from deforestation. The EU proposal is not limited to illegal deforestation and degradation but targets all deforestation and degradation.
This ambitious regulation, aiming to reduce the EU’s international footprint on forests, would significantly help reduce greenhouse gas emissions — both within Europe and around the globe. It could also positively impact biodiversity, as well as promote sustainable production and consumption patterns.Additionally, it could encourage and inform legislative measures in other markets. The United Kingdom introduced a similar regulation focusing on illegal deforestation as part of its 2021 Environment Act, and a bill proposing a regulation on commodity imports has also been introduced in the U.S. Congress to tackle illegal deforestation in commodity supply chains. A recent analysis suggests that voluntary commitments, such as the New York Declaration on Forests, are not enough to keep the world on track to end global deforestation. Mandatory requirements for commodities associated with deforestation and forest degradation like these are thus necessary to achieve the goals laid out by these commitments.
4 Ways to Improve the EU’s Regulation for Deforestation-free Products
The proposed regulation is well thought out, with a detailed framework for implementation, and thereby represents a significant improvement when compared to past efforts to regulate the trade in timber.
However, there are four areas where policymakers in the EU should strengthen the regulation so that it can fully achieve its potential:
1. Clarify key definitions.
The regulations should define key terms such as “forest,” “deforestation” and “agricultural use” more clearly to avoid ambiguity. The definitions should make it absolutely clear that conversion of a natural forest to a timber plantation counts as deforestation, and should ensure there is no confusion around whether agroforestry systems count as forests or agriculture.
How to Define a Forest
The definition of “forest” in the proposed EU regulation lacks a clear distinction between natural forest and timber plantations. Policymakers should clarify whether this definition includes planted forest, plantation forest or agroforestry. The regulation defines “deforestation” as “‘the conversion of forest to agricultural use, whether human induced or not.” However, it does not define the term “agricultural use,” and the regulation explicitly excludes plantations for wood from its definition of "agricultural plantation." As such, it’s unclear whether the regulation considers a monoculture timber plantation as agricultural use — even though in practice this would clearly constitute conversion if the plantation were established on former forested land. Not defining such important terms could result in cases where the conversion of natural forest to a timber plantation is not recognized as deforestation.
2. Broaden the scope to expand the landscapes covered and include rubber.
The regulation currently only covers conversion from forest to commodity production. However, it does require policymakers to assess its potential application to other landscapes — such as savannahs, wetlands and peatlands — within two years after it’s put into practice. Instead of postponing the decision on whether to include other landscapes, the EU should broaden the scope of the regulation now. These ecosystems are already directly threatened by commodity production, and efforts to protect forests can push agricultural expansion into other valuable ecosystems.
Additionally, the proposed regulation covers six commodities: palm oil, soy, cattle, cocoa, coffee, wood and some derived products — all of which are major drivers of forest degradation and loss. A WRI analysis showed that globally, cattle pasture is by far the biggest cause of deforestation, replacing 3 million hectares (7.4 million acres) of forest on average per year between 2001-2015, followed by oil palm (0.7 million hectares, or 1.7 million acres per year) and soy (0.5 million hectares, or 1.2 million acres per year).
However, that analysis also showed the importance of other commodities linked to deforestation — especially rubber, which is currently not included in the regulation.
Plantation rubber plays an important role in the EU economy as well as global deforestation and biodiversity loss. About a quarter of global rubber production is destined for the EU every year. Our analysis indicates that plantation rubber replaced at least 2 million hectares of forest from 2001 to 2015 — the same level as cocoa or coffee, which are both covered in the regulation. In addition, rubber is also listed in the regulated commodities in the proposed U.S. bill. Where possible, the EU should coordinate with other markets on which commodities to regulate to achieve the greatest impact on the global market, and to create a level playing field for companies operating across markets considering a commodity regulation.
3. Enable effective enforcement by increasing transparency.
Under the proposed EU regulation, companies are obligated to conduct due diligence to ensure only deforestation-free products are allowed into the EU market. Companies must show that commodities were not produced on any land deforested or degraded after December 31, 2020. Commodities must also have been produced legally.
However, to effectively implement mandatory requirements such as those in the regulation, commodity supply chains need to become more transparent. Transparency is a prerequisite for accountability. Under the draft regulation, commodity importers will be required to collect and report the geographic coordinates of the land from which the commodities imported into the EU are sourced. This obligation makes it possible to pinpoint deforestation in specific areas to shift sourcing and help target enforcement actions.
As part of the Accountability Framework Initiative, WRI supports a set of agreed-upon definitions and resources for deforestation-free supply chains, including a deforestation risk toolset. This toolset, along with other resources created by governments, civil society and companies themselves, can facilitate compliance with the draft regulation. However, all these tools depend on up-to-date and high-quality data on forest monitoring, trade and shipping, which in turn rely on investment by donor countries. The EU and other governments should continue to invest in improved tools and resources to support implementation of the regulation, and work towards more easily accessible data on trade and shipping.
Transparency is key; therefore, the EU should also include a disclosure requirement for the non-confidential information contained in the company declarations mandated under the regulation. While the EU has announced a plan to create a harmonized online platform to receive and manage the declarations, it’s unclear what level of detail will be made public. To facilitate independent oversight over the implementation of the regulation, the EU should make public as much of this information as possible.
4. Improve supply-side engagement strategies.
The burden of removing deforestation from commodity supply chains should not be placed only on the countries that produce the commodities. While the proposed regulation recognizes the need to develop partnerships and cooperation with producer countries, policy makers can strengthen it with more targeted supply-side engagement. Support is especially needed to avoid cutting smallholder producers out of the market when companies have incentives to simplify their supply chains in response to the regulation. Consumer markets should not only focus on shifting imports to clean supply chains, but also on improving on-the-ground practices. If consumer markets don’t engage with producers, the problems will not be solved.
Existing policy measures in timber supply chains, such as the European Voluntary Partnership Agreements and the Forest Annex in the US-Peru Free Trade Agreement can provide lessons for effective supply-side engagement strategies that have proven successful, including:
- Developing bilateral agreements that provide real benefits and meet the trade and development priorities on both sides, building on the proposed partnerships in the draft regulation, raising forest governance in engagement early on, and creating binding roadmaps for improving transparency.
- Supporting multistakeholder processes to clarify the legal framework and land use planning process in producer countries.
- Providing financial and technical support to help producer countries meet legality and sustainability requirements, focusing on smallholders in particular.
- Establishing a clear role for independent verification and monitoring, and for civil society.
The proposed EU regulation sets an ambitious precedent to halt global deforestation and forest degradation through innovative and comprehensive legislative measures. The suggested improvements above largely align with the recently published draft report from the EU Parliament on the proposed regulation. Europe needs to reduce its global footprint. Setting clear production and consumption standards that are good for people, climate and nature is critical to achieving this. A robust and ambitious EU regulation — along with similar regulations in other consumer countries — can send a strong signal to the global market that commodities must be produced without resulting in forest loss to meet climate, biodiversity and sustainable development goals.
Ruth Nogueron and Marie Vallee also contributed to this article.