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POM’s intel sources in Brussels indicate the EU’s Deforestation Criteria drafting process is well underway. They also indicate that the EU expert visit to Southeast Asia has done little to change the anti-palm flavor of the new regulation.

Here’s what we know about the delegated act so far.

First, as we reported last week, the Commission will propose that all first-generation oilseed crops will be assumed to be ‘high risk’ under the Deforestation Criteria.

The Deforestation Criteria effectively acts as a filter: if the crop passes, then it moves through the filter to become ‘low risk’. If it does not meet the Deforestation Criteria, it remains high risk and is subject to an immediate freeze on imports.

Second, a key element in determining the criteria will be the phrase ‘significant expansion’ of feedstocks on high carbon stock areas.

What we don’t know is what ‘significant’ actually means. The June compromise stated where ‘significant expansion … is observed’. It’s also not clear whether this is forward- or backward-looking.

Is it going to be ‘significant’ in relation to the expansion of all agriculture on HCS areas? Or only in relation to other biofuels?

Assuming the RED cut-off date of 2008 will be retained, the EU will be looking to bring in criteria that label palm oil’s expansion since 2008 as ‘significant’ – but the expansion of other crops, such as rapeseed, will be spared (primarily because it will be deemed as not affecting HCS areas).

Is ‘significant’ going to mean only from particular countries? For example, would Nigeria’s non-expansion of oil palm estates be punished for expansion of oil palm in Colombia?

If such a diverse group is lumped together and uniformly labelled ‘high risk’ by the EU. It’s important to note that this would be a departure from the current EU sustainability criteria under RED, where certification is achievable by individual companies, through the EU’s approved certification schemes.

Third, there is likely to be room for bilateral arrangements in the regulation. Trying to isolate feedstocks by country will bring up problems at the WTO. But clearly this would be a preferred option. This is one of the reasons DG Trade has been giving DG Energy such a difficult time in the drafting process.

One of the ways countries are able to resolve this problem of treating countries differently is by undertaking ‘good faith’ negotiations with their trading partners and, if possible, reaching an agreement.

A sign of good faith in this instance might be leaving room for bilateral negotiations and a potential agreement in the new regulation.

There is still a way to go with this drafting process. The EU is attempting to balance protection for its farmers with its rather obsessive and narrow global environmental objective, i.e. reduce carbon emissions.  For the past ten years it has failed. Numerous multilateral agreements – the WTO, UNFCCC, SDGs – expressly warn against or prohibit the use of environmental rules as a form of protectionism. The RED is a very good example of why it’s a path best avoided.