European Union Deforestation Regulation Largely 'Dismantled' After High Hopes

Originally hailed as a pioneering law that would curb the global scourge of forest loss.

However, the final version of the European Union's anti-deforestation law, once heralded as the crown jewel of the Green Deal, has been passed in a significantly diluted state, leading to alarm from its initial author and environmental politicians.

"It has been hollowed out," said the law's original author, pointing to the exclusion of key obligations for later-stage companies to check the provenance of products like palm oil, soy, wood, beef, rubber, cocoa and coffee.

Schally cautioned that fewer obligated actors, less information collected, and less precise origin data would make enforcement and prosecution more difficult.

A Watered-Down Law

Environmental vice-president Marie Toussaint was more blunt, describing the delays, loopholes and exemptions – including one for printed products – as the "systematic weakening" of the law.

This outcome stands in stark contrast to the demands of over 1.2 million EU citizens who signed a petition in 2020 calling for a ban on goods linked to forest destruction.

At its launch in 2021, the EU's climate chief the European commissioner called it "the most ambitious law proposed to fight forest loss."

A Story of Dilution

The regulation's dilution is seen by critics as the EU walking back its environmental promises. It faced two major postponements, ostensibly over IT issues, which sparked criticism.

"By reopening this file rather than fixing a simple IT problem, the commission opened Pandora’s box," commented Toussaint.

In its first draft, the law mandated that firms to trace goods to their specific geographic origin using GPS coordinates, making them liable for deforestation in their supply chains with penalties and hefty fines.

"It wasn't bureaucracy for its own sake," the former official said. "These rules were the tool that ensured enforcement, established traceability, and prevented firms from obscuring their activities behind complex supply chains."

Mounting Pressure

Yet, the strict due diligence provoked opposition in the EU capital from multinational corporations, exporting nations, conservative political groups and member states with forestry industries.

Experts cite last year's European Parliament elections as a turning point, shifting the balance of power less favorable toward green regulations.

"The other pressure came from major export markets outside the EU," noted expert Andreas Rasche, suggesting the commission gave in to some demands in trade talks.

Key Loopholes Introduced

In the final legislation features key dilutions:

• Downstream operators were mostly exempted from submitting due diligence statements.
• A new “low risk” category was introduced.
• A window for further "simplifications" was established for next spring.
• Only a handful of nations – geopolitical adversaries of the EU – will face the strictest monitoring.

"Instead of tightening rules for companies, it stripped them back," said Schally. "Moving obligations upstream, it lessened the number of responsible firms."

Uncertainty for Companies

The protracted process and revisions have also created annoyance for businesses that complied early.

"We feel very annoyed because we put a lot of effort into preparing," said Xavier Rombouts. "We invested in software, followed seminars and built a team... now they’re saying it could be altered again. It’s a major letdown."

The Commission's Stance

An EU representative supported the final law, saying: "The commission has responded to concerns and taken action to ensure a simple, fair and cost-efficient implementation."

"The new text ensures stability, which is key for business and competent authorities to successfully implement this vitally important regulation."