- The EUDR Task Force meets for the first time this week in Jakarta
- The initial meeting won’t produce significant outcomes, but will set expectations
- A new EUDR FAQ document signals what the Brussels wants implemented
The first meeting of the Indonesia-Malaysia-EU Task Force meets in Jakarta on Friday. As with most initial bilateral or multilateral meetings, there won’t be a great deal that gets settled – it will mostly be about establishing the rules of engagement, but it will also set some expectations about a path forward.
In the lead-up to the meeting, the Commission has released a “FAQ” on the EUDR. It’s primarily aimed at European importers of commodities. Importers have been asking many of the same questions that exporters have.
But the document gives a clear insight into how the EU sees the implementation phase of the regulation – and undermines many of the myths that have been created around the EUDR.
And importantly, it gives greater insight into what the EU will seek to gain out of the Joint Task Force process.
Myth 1: The EU Wants the Joint Task Force to Succeed
The recent Joint Mission by Indonesia and Malaysia to the EU produced a number of clear outcomes. The first of these was that Southeast Asian nations put a clear marker down on the EU’s attempts at extraterritorial regulation. The second was the establishment of the Joint Task Force.
Among the palm oil community the fear is that the Task Force is simply a box-ticking exercise on the part of the EU. As the FAQ document notes, the EUDR legally requires the Commission to consult partner countries on the EUDR that it may be considering as ‘high risk’. Is the Commission setting up Indonesia and Malaysia as high risk already?
It’s worth remembering that we’ve been here before with EU-supported confabs on palm oil: remember the ASEAN Joint Working Group on vegetable oil? One thing to remember is that if the EU wants to put off a decision, it will often set up a talk shop.
Myth 2: There is a smallholder exemption.
The document states: “For plots of land under 4 hectares, operators (and traders which are not SMEs) can use a polygon or a single point of latitude and longitude of six decimal digits to provide geolocation.”
It’s worth noting that to determine whether a piece of land is below the 4 hectare threshold, the area of the land needs to be measured – which effectively requires establishing and measuring the polygon. Even if the smallholder isn’t required to provide a set of coordinates, it will require an equivalent amount of work and effectively the same data.
It would therefore appear that the only exemption smallholders are actually receiving is the polygon requirement, and that geolocation requirements for smallholders are still fully in place, no matter how small.
Myth 3: The EUDR places obligations on importers, not farmers
The document states: “Farmers can collect the geolocation of their plots of land via mobile phones.”
This is a clear indication that there is an expectation on the part of the Commission that it will be the farmers will need to collect and supply the data, rather than an obligation on the part of any importers. This statement undermines what any number of EU diplomats have been saying in relation to the EUDR; this would in today’s language be described as disinformation.
Myth 4: The EUDR will not require personal information be passed to importers and registers
The document states: “No personal information is required from the farmers … The geolocation of the land they cultivate is sufficient.” However, it also states, “the Regulation requires compliance with national laws. If under the national laws (which might lack a property register and where some farmers might lack IDs), farmers are legally allowed to farm and sell their product, then that would also mean that operators (or traders that are not SMEs) would generally be able to meet the legality requirement when sourcing from those farmers. Operators (or traders that are not SMEs), nonetheless, would need to verify that there is no risk of illegality in their supply chains.”
But realistically, the only way this can happen is through the linking of a farmer to a piece of land – and this can’t be done without personal information.
This will pose some additional problems for exporting countries. Indonesia has recently introduced a data protection law that regulates the movement of data across borders, but there are many countries that simply haven’t put digital trade regulations in place.
Myth 5: A Jurisdictional Approach is possible
The FAQ clearly states that: “A polygon cannot be used to trace the perimeter of a random land area that might include plots of land only in some of its parts.”
In other words, it won’t be possible to ‘section off’ a region or sub-region and argue that all plots and landowners within that region comply by virtue of their local laws, regulations and aggregate risk.
EU programs such as the Terpecaya program, and NGOs such as WWF have suggested that a jurisdictional approach or landscape approach will be a pathway for compliance. This is simply not the case. A jurisdictional approach may work for assigning risk, but it won’t be of assistance with compliance.
Myth 6: Full certification is required
There are many myths around certification and the EUDR currently being circulated. However, the document states: “Certification schemes can be used by supply chain members to help their risk assessment to the extent the certification covers the information needed to comply with their obligations under the Regulation.”
This is a significant statement because it doesn’t mean certification is a ‘green light’, but it does imply that if certification provides the information required for compliance, then it will effectively form a compliance backbone. Many certification schemes contain verification of ownership, geolocation, respect for local rights and legality.
However, this also counters the myth that a broader set of criteria and indicators that aren’t relevant to the EUDR will somehow improve compliance.
In addition, the document also effectively kills off mass balance as any sort of assurance for anything: “mass balance is therefore to be ruled out, full identity preservation is not needed.” Mass balance won’t be acceptable for any sort of compliance; but that also means that identity preservation isn’t needed – as all palm oil will need to be traceable.
Myth 7: EUDR will support RSPO
This leads to another important question: what does this mean for RSPO? The EUDR effectively kills of the mass balance system of certification for Europe; it also states that full identity preservation is not needed, and ultimately, all that is needed is segregation.
Many importers had been fulfilling their internal sustainability obligations by simply buying GreenPalm certificates. And it’s worth remembering that the biggest market for certification is Europe. The elephant in the room here is that EUDR – perversely – may end up killing demand for RSPO certification.
EUDR is about proof of zero deforestation, legality (including land tenure). If – as its proponents claim – that the regulation is enough to block imports that don’t meet those conditions, why is a relatively expensive certification system that segregates supply chains needed by importers, and therefore exporters?
Other national certification systems or slimmed-down assurance systems may instead meet that demand. RSPO will likely assist many businesses that have it in providing the information required for EUDR, but when it comes to renewing certification, businesses may be looking at other options.
Things are Moving
Things will move rapidly after Friday’s meetings. Producer positions will become more clear while NGOs will be doing their best to undermine the case from palm exporters they can be considered low risk. Expect a rise in anti-palm campaigns as the various implementation deadlines approach. It’s going to be a rocky few months.