The European Commission (EC) proposal to push back the implementation of European Union Deforestation Regulation (EUDR) by a year has come as a relief to exporters of $ 1.3 billion worth of agriculture products to the 27 member bloc.
“Products such as coffee ($435.4 million), leather hides and skins ($83.5 million), oil cake ($174.5 million), paper and paperboard ($250.2 million), and wood furniture ($334.6 million) are directly impacted by the regulation,” an analysis by Global Trade Research Initiative’s Ajay Srivastava said.
The proposal by EC, the executive branch of the European Union will now have to be approved by the European Parliament and member states. As per the proposal, large companies are now required to comply by December 30, 2025, and small and micro-enterprises by June 30, 2026 with the regulations. The extension will allow time for exporters of agriculture-related products to Eu to adapt.
EUDR is one of the many steps including the Carbon Border Adjustment Mechanism (CBAM), taken by the EU to get to net zero carbon emissions by 2050. Under this regulation adopted in May last year, exporters to the EU must ensure that farm products have not been grown on land which has been deforested after December 2020.
The covered products include coffee, leather, oil cake, wood furniture, paper, and paperboard, with plans to expand the product list further.
The regulation has faced significant backlash from several major trading partners. China, in particular, has outright rejected the EUDR, citing concerns over sharing sensitive geolocation data due to security risks. As China dominates the global supply chain for forest products through its Belt and Road Initiative, its refusal to comply creates a significant challenge for the EU, which relies heavily on Chinese imports of timber, furniture and paper products.
Other countries, including the United States, Brazil, and several Asian nations, have also voiced opposition, arguing that the regulation increases production and export costs.
The compliance process is particularly burdensome. Exporters must ensure that the land used to produce goods for the EU market was not deforested after December 31, 2020. They are required to implement costly traceability systems that track the entire supply chain—from Indian farms to EU markets—providing detailed information on commodity quantities, farmer names, and land plot locations. This complex procedure also involves sharing farm and farmer data with the EU, and companies must submit a due diligence statement to EU importers, certifying that their products comply with both local and EU regulations related to land use, labour, and human rights.
“The additional costs of compliance may push many small and medium-sized exporters out of the EU market, as they struggle to meet these high standards. Even exporters confident that their products do not originate from deforested land must still adhere to the intricate due diligence requirements, adding to their costs,” Srivastava said.
From: financialexpress
Financial News
