EU’s deforestation law that could hit Indian exports opposed by many WTO members

India’s concerns on the EU’s new Regulation on Deforestation-Free Products (EUDR), that would restrict exports of several items to the bloc from this year-end (December 30 2024), have been shared by a number of other WTO members who all asked for its  postponement at a recent meeting in Geneva, sources said.

New Zealand, Australia, Brazil, Indonesia, Paraguay, Ecuador, Guatemala, Thailand, and the United States, all shared their misgivings on the new law which requires a variety of agricultural products sold in the EU market to be ‘deforestation-free’ and asked for postponement of its implementation, a Geneva based trade official said.

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’Deforestation-free’ means they must not result from recent (post December 31 2020) deforestation, forest degradation, or breaches of local environmental and social laws.

The EU, however, seemed determined to roll-off its deforestation regulation as planned and said it would get things ready for a smooth implementation.

“It is an important development for India that so many countries, both developed and developing, have opposed the EUDR at a recent agriculture committee meeting and also called for its postponement. If implemented in full, without any dilutions or exclusions, it could severely hit Indian exports to the bloc,”  another source tracking the matter told businessline.

An estimated $1.3 billion of Indian exports to the EU could be affected once the EUDR is in place, per calculations made by research body Global Trade and Research Initiative (GTRI).

This is because the rules would not only apply on the seven identified commodities–cattle, cocoa, coffee, oil palm, rubber, soya and wood–but  also items derived from these. 

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An entire range of items could get affected such as meat products, leather, chocolate, coffee, palm nuts, palm oil derivatives, glycerol, natural rubber products, soybeans, soy-bean flour and oil, fuel wood, wood products, pulp and paper and printed books.

The critics cited multiple reasons for their deep concerns over the policy, the trade official said. Indonesia focussed on the problems that the `benchmarking system’ would create by marking regions as high risk, medium risk and low risk, as there was a lot of confusion surrounding the categorisation. 

India, too, had raised questions on conditions surrounding the benchmarking process in questions submitted to the EU and asked it to elaborate on the rationale behind them.

“Other countries criticised the one-size-fits-all approach and also the lack of a system that would effectively support compliance. They said that there was very limited time to comply, and for small producers the procedures were both costly and burdensome,” the trade official added.

The EU, however, made it clear that it was determined to go ahead with the implementation and said that the classification of high-risk and low-risk countries would be based on scientific data and internationally recognized sources.

India had raised concerns on how low income farmers would be protected against the high compliance cost of the regulation. The EU stated that it has introduced several ongoing programs at different levels to help developing countries address the needs of smallholders and achieve deforestation-free supply chains. It added that a 7-million-euro fund will act as a flexible and on-demand instrument to assist smallholders with geolocation, mapping, and traceability.