EU Postpones Deforestation Rule, Easing Pressure on Key Exporters

New Delhi, Oct 4 (KNN) In a move welcomed by exporters of agriculture products, the European Commission (EC) has proposed delaying the implementation of the European Union Deforestation Regulation (EUDR) by one year.

The extension, which shifts the deadline for compliance to December 30, 2025, for large companies and June 30, 2026, for smaller enterprises, has provided much-needed relief for businesses exporting USD 1.3 billion worth of goods to the EU's 27-member bloc.

Products such as coffee (USD 435.4 million), leather hides and skins (USD 83.5 million), oil cake (USD 174.5 million), paper and paperboard (USD 250.2 million), and wood furniture (USD 334.6 million) are directly affected by the regulation, according to an analysis by Global Trade Research Initiative’s Ajay Srivastava.

These exporters will now have more time to adapt to the EU's stringent environmental requirements.

Adopted in May 2023, the EUDR is part of the EU’s broader efforts, including the Carbon Border Adjustment Mechanism (CBAM), to achieve net-zero carbon emissions by 2050.

Under the regulation, exporters must ensure that their products are not derived from land deforested after December 31, 2020. The extension is crucial for exporters needing time to implement complex traceability systems that monitor the entire supply chain—from farms to EU markets.

While the delay is seen as a relief, many exporters remain concerned about the high costs of compliance. Srivastava highlighted the burdensome process, stating, "Even exporters confident their products are deforestation-free must adhere to intricate due diligence requirements, adding to their costs."

These systems require detailed data on farms, farmers, and land plots, all of which must be submitted to EU importers, potentially discouraging smaller players from accessing the EU market.

The regulation has also sparked international tensions, particularly with China, which dominates the global forest product supply chain.

China has rejected the EUDR, citing data security concerns, while other major trading partners like the United States and Brazil have criticized the additional costs and regulatory burden.

As the European Parliament and member states review the EC’s proposal, exporters and policymakers alike will watch closely to see how this regulation impacts global trade relations.

(KNN Bureau)