- ENVI Committee yesterday voted to propose a fourth risk tier that could exempt most EU members from key EUDR requirements;
- Legal analysis warns the proposal likely violates WTO non-discrimination rules and could trigger trade disputes;
- The ‘negligible risk’ category echoes a failed 2024 “no risk” amendment that was shelved over similar WTO concerns
The European Parliament’s Environment Committee last week backed a proposal that could fundamentally undermine the EUDR – the very regulation that palm oil exporters and trade experts warned was problematic from day one. The committee voted to introduce a “negligible risk” category, essentially creating a ‘fast lane’ for countries deemed to have exemplary forest governance.
There is a significant irony here. Indonesia and other exporters warned Brussels for years that the EUDR’s country-based approach would be potentially discriminatory. and This eventually resulted in a breakdown of trade relations, particularly between Jakarta and Brussels. These warnings were – for the most part — dismissed. Now, with pressure from their own farmers and a looming December 2025 deadline, EU lawmakers are scrambling to create exemptions – but only for the “right” countries and the “right” products.
Under a motion put forward by by Austrian EPP MEP Alexander Bernhuber, countries meeting specific criteria would see their exports face dramatically reduced or even eliminated due diligence requirements. Sound familiar?
A similar “no risk” amendment floated in late 2024 was quietly buried after legal advice concluded it would “likely fall foul of the WTO.”
The proposal would effectively create what 11 EU agriculture ministers called for in May – a system where EU farmers get a free pass while developing countries face full regulatory requirements.
There’s a big problem here for Bernhuber and the EPP. This approach breaches just about every WTO non-discrimination principle. A simple explanation is as follows: giving certain countries lighter treatment means that the EU would be according advantages that must, under WTO rules, be extended “immediately and unconditionally” to all members’ like products. When Austrian timber breezes through with minimal checks while Indonesian palm oil faces exhaustive documentation requirements, you’ve got discrimination written all over it.
The timing is also poor. Just this month, Indonesian officials were in Brussels lambasting the EUDR’s impact on 8 million smallholders and its reliance on “outdated” FAO data. Jakarta has consistently argued that the regulation was imposed unilaterally without consulting producer countries – a complaint that would ring increasingly true if the EU seeks to unilaterally exempt its own producers.
The parallels to previous WTO smackdowns should worry Brussels. Under a previous rule for seal products, the EU’s exceptions conveniently benefited Greenlandic hunters while shutting out Canadian and Norwegian products. Cases like this teach a simple lesson: you can’t create arbitrary distinctions between trading partners and expect to get away with it.
The U.S. has been seeking a “low risk” status in the May 2025 country benchmarking while pushing for “pragmatic accommodations” in ongoing trade talks. The USTR has framed U.S. concerns around technical issues like plot-level traceability for mixed wood products, avoiding the appearance of seeking outright exemptions.
This approach has yielded results – the U.S. is now part of broader EU-US negotiations on non-tariff measures where EUDR is explicitly on the table.
The Road to Trade Disputes
Trade lawyers analyzing the negligible risk proposal have note that even if the EU could justify the measure under environmental exceptions, the selective exemption would likely constitute “arbitrary or unjustifiable discrimination” under WTO rules.
The scheme essentially creates what critics warned about all along – a two-tier system that looks suspiciously like picking winners based on politics rather than genuine deforestation risk.
As one analysis noted, the negligible risk category could become “the Achilles’ heel of the EUDR in a WTO dispute.” Given that 17 countries have already raised concerns at the WTO, Brussels might want to think twice before handing them a loaded legal weapon.
What happens now?
The motion from the Committee is non-binding. It’s a bit like saying, “we’re upset”. But if this creates enough attention among the EPP there are additional steps the Party can take. But this means a clear choice: agree to this motion that virtually guarantees trade disputes, or acknowledge what producer countries have been saying all along – that the EUDR’s country-based approach is fundamentally flawed.