The Deforestation Regulation: The EU Empire Strikes Back

  • The EU Parliament has voted in favour of the deforestation regulation

  • Its proposed amendments are a Green wish list and expand the regulation to include all ecosystems – even deserts

  • The pressure will be on the Commission and Council to rein in the Parliament if it is to save its trade relationships

  • The EU move comes as yet another study confirms Indonesian deforestation is falling

The European Parliament voted on its proposal for the EU Deforestation Regulation last week. Predictably, the vote was a significant majority in favour, but EU Parliamentarians couldn’t help themselves with amendments to the regulation; the end-result is a Green dream intent on penalising developing country agriculture.  

Just to remind, on paper, the regulation is designed to prevent the sale of commodities that have been sourced from deforested and degraded forest land on the EU market. In reality, the regulation will act as a protectionist barrier against developing country exports, particularly palm oil, beef, and soybean.

Unsurprisingly, the response from developing countries has been overwhelmingly negative. A letter from the governments of 14 producer countries – including Indonesia — stated:

“Trade restrictions or the threat thereof cannot be the preferential means to achieve environmental ends… [they] only lead to a downward spiral of trade distortion, reduced trade opportunities and increased impoverishment.”

Governor of Mato Grosso in Brazil, Mauro Mendes, also called out the measure, stating “[Europe] should take their hats off and applaud us, because we are producing food for Brazil and the world.”

Even Australian beef producers have called out the potential trade threat. The head of Australia’s peak farming body said:

“We don’t need well-intentioned people on the other side of the world telling us how to care for our unique environment …We all want to stop biodiversity loss, but this can look very different in an Australian context.”

For Indonesian palm oil, though, the introduction of the regulation is another in a series of measures aimed at blocking Indonesian palm oil, from antidumping measures and countervailing duties through the palm oil ban in the Renewable Energy Directive.

Adding to this, Europe’s so-called aid measures on the environment – whether part of its diplomatic outreach or its aid programs – have done very little to support Indonesia’s broader sustainable development goals.

At risk, too, is the completion of the Indonesia-EU trade agreement. Indonesian negotiators have privately complained of the EU ‘moving the goalposts’ on sustainability in the agreement; this imposition of a significant new barrier won’t make that process any easier.

This comes at a time when yet another study has confirmed that Indonesia’s deforestation rate is slowing significantly. The Stockholm Environment Institute has released a study that shows:

“Annual deforestation for palm oil in 2018-2020 was 45 285 ha per year – only 18% of the average between 2008-2012, the period of peak deforestation over the last two decades.”

Simply, Indonesia’s deforestation rate for palm oil has dropped by more than 80 per cent over a decade. Despite this, Brussels seems intent on punishing Indonesia for its efforts.

We’ll be providing commentary and analysis of the Deforestation Regulation over the next few days.