- The EPP is proposing a 2027 start date for the EUDR;
- The 2-year delay was proposed at an EPP meeting in Portugal;
- A Malaysia-EU FTA won’t solve the EU’s green barriers on palm oil;
- The EU’s commissioned work on MSPO gaps is fundamentally flawed
EUDR Update: EPP Proposes 2027 Start Date
At time of writing, the environmental spokesman for the European Peoples’ Party (EPP), Peter Liese, had proposed a 2-year delay to the EUDR at the Party’s ‘study days’ in Portugal.
The proposal would have implementation commence on January 1, 2027.
For context, this is a three-day meeting where the EPP – which won the largest number of seats in the EU election – refines the position it will take into European Parliament.
This, in turn, will be used as the negotiating position with other parties to form a voting bloc, determine Commissioner posts and the Commission’s mandate in the new Parliament.
Liese is proposing that the Parliament use an ‘Urgent Procedure’ to revisit and revise the EUDR. Liese has made it clear that this will simply be to delay the implementation of the Regulation to ensure that compliance is both possible and workable.
This was the same procedure that was used to review and alter additional green compliance requirements under the Common Agricultural Policy (CAP) in April of this year.
Is this urgent? Frankly, yes. As both EU businesses and exporting companies have pointed out numerous times, they commence preparing their EU-bound shipments about three months in advance.
So, a January shipment arriving when the EUDR is in effect, will be leaving within a matter of weeks. And the fact is that the EU has not made its compliance requirements remotely clear.
Will this mean a delay? Brussels appears no closer to providing the guidance that it has been promising for months.
In our view, the holdups are likely due to what DG ENVI wants, and what is achievable from the perspectives of DG TRADE and the customs agencies of various states. And this has always been the problem: DG ENVI simply assuming that environmental problems can be tackled with little consideration for the trade impacts.
But perhaps this pattern is unlikely to continue. Early this week, DG Trade Sabine Weyand noted that all EU regulations should include as assessment of the “external dimension” of any measures such as the EUDR.
A Malaysia-EU FTA won’t solve green trade barriers
A number of Malaysian stakeholders have most recently been pushing for the re-start of the Malaysia-EU FTA negotiations.
The negotiations were previously suspended in 2012, after questions around Malaysia’s labour practices.
Unlike many of its partners in the region, Malaysia has been generally reluctant to re-engage on bilateral agreements, instead leaning towards multilateral agreements such as CPTPP, RCEP or as part of ASEAN.
It is understood that some officials in Putrajaya believe that a new negotiation with the EU would somehow resolve some of the Green Deal issues facing its exports, particularly the EUDR, and that MSPO could be a key part of this.
However, Malaysia needs to keep its expectations in check. Consider, for example that although the Hungarian Presidency has expressed a clear desire to re-start the negotiations, the ‘mirror clause’ approach to FTAs is alive and well in Europe.
Just to remind, the ‘mirror clause’ approach is this: if the regulation applies in the EU, it needs to apply to trading partners.
This goes both ways. The EUDR will apply to Swedish foresters, just as it will to Malaysian palm producers. Why, then, would MSPO somehow be granted a ‘green light’? And wouldn’t this mean a similar green light would be needed for MTCC (the Malaysian timber certification system) – and therefore also rubber and cocoa?
How can EFI assess benchmarks that don’t exist?
A similar theme emerged at a recent event in Malaysia covering the EUDR, and the regulatory and compliance gaps between the EUDR and MSPO.
What emerged was the considerable gap between the EU’s consultants (the European Forest Institute — EFI), palm oil operators, and the EU itself.
EFI, as they have in previous events, pointed out the potential compliance gaps between the EUDR and MSPO. However, many of these gaps can only be speculative, as Brussels is yet to release guidance on what EUDR compliance will look like for the ‘legality’ component of the Regulation.
If anything, the EFI’s perspective on MSPO – which is arguably one of the more advanced agricultural certifications when it comes to the EUDR – was highly critical.
The EU, for its part, provided precisely nothing. To be blunt, the EU’s presentation was about as helpful as looking at the EUDR website.
Questions about the readiness of the IT system and the delayed benchmarking process went unanswered. Moreover, answers on potential for certification as a means of compliance repeated what had been published previously: certification will assist but not meet compliance requirements. This is the same with EU Member State based certification systems.
In a particularly tense moment, Malaysian operators – some of the country’s largest names, from KLK to Wilmar – pointed out that the scope of EFI’s study provide very little in the way of solving the largest compliance problem of all: traceability through downstream processes.
Possibly the most disarming moment of all was Wilmar stating clearly that smallholders would be excluded from the supply chains exporting to the EU. This is not because smallholders are illegal or have deforested after 2020, but because the compliance through the supply chain is simply too burdensome:
“Of course, we will continue to buy from the small holders, but we cannot send their oil to Europe. So, we need to keep it separate or we need to transport it to markets who are not supplying to the EU. Is that is this an efficient solution? Of course not. It’s a very inefficient and an often costly solution.
Does this this means that small holders are not complying with EUDR? Absolutely not. Smallholders can perfectly comply with EUDR but [are] just missing those maps because they never got to it, or it’s too complicated, or they don’t have the time, or they don’t have the knowledge most of the time to do the geolocations of their lands.
So, with this we cannot take their oil. Are they non-compliant? Absolutely not. They [have] worked on that plantation or live on that plantation already since 2001.”
There is no doubt that the EU has commissioned to answer specific questions around compliance gaps, but the truth is that those questions can’t be answered. The end result is that it simply makes MSPO look bad, rather than the EUDR.
And, given the endless criticism from industries and politicians within the EU, how is it that MSPO ends up with the negative report card?
This begs the question: what is the point of commissioning this work? It’s impossible to assess MSPO against the EUDR benchmark when the benchmark in absolutely unclear.