EU’s deforestation regulation unlikely to be passed in 2023 as few areas remain unresolved, says CPOPC
30/11/2022 (The Edge Markets) - Council of Palm Oil Producing Countries (CPOPC) said it is unlikely that a political agreement could be reached soon to pass the European Union (EU)’s deforestation regulation, which is expected to be implemented next year.
The new deforestation regulation by the EU is aimed at importation of commodities such as palm oil, cocoa, soy and beef, which may have contributed to deforestation in the originating or producing countries.
The European Commission (Commission), the European Parliament, and the Council of the EU have engaged in inter-institutional trilogue negotiations to agree on a common text for the regulation.
“Within the EU, there are disagreements. The problem with the EU — its commission, council and the countries involved are three different matters. Implementation is carried out by each country; therefore, even though the commission made a decision, and the council endorses it — the decision has to be transposed into the national legislation.
“Therefore, I don’t think that a political agreement for the deforestation regulation can be reached by next year,” said CPOPC deputy secretary-general Datuk Nageeb Wahab at the second day of the RSPO Annual Roundtable Conference on Sustainable Palm Oil (RT2022) on Wednesday (Nov 30).
“However, it appears that after the last incident on the shortage of edible oils, the EU has taken a softer stance on palm oil. Therefore, I believe they will hold back on the implementation of the legislation. They have softened their anti-palm oil stance — so that is a good thing for us,” he added.
According to the deforestation regulation, one of the requirements set was a “traceability” requirement, which includes “geolocation” with coordinates of the land where the commodities are produced.
This requirement is said to have raised concerns among producing countries, as it might add complexity and likely incur hefty additional costs for producers.
According to the regulation, it also requires EU palm oil importers to demonstrate that they can hold their global suppliers accountable for not being linked to deforestation and human rights violations.
CPOPC further added that individual member countries should engage with the EU regarding this proposed regulation, which looks poised to have a significant impact on palm oil.
“Notably, the EU should rely on an internationally-accepted definition of ‘deforestation’ and the CPOPC should advocate for particular aspects of the deforestation-free products’ regulation catering to the needs of palm oil-producing countries, particularly with respect to smallholders and MSMEs (micro, small & medium enterprises) involved in the supply chains,” a CPOPC’s spokesperson said.
He added that under the Malaysian Sustainable Palm Oil (MSPO) certification scheme, mandatory rules as required by the EU already confirm compliance with a number of social and environmental standards.
“Therefore, businesses should be able to rely on the MSPO scheme, in order to ensure compliance with the due diligence obligations set by the regulation,” he added.
The EU’s deforestation regulation is expected to be passed in the European Parliament by the end of this year.
“The final negotiations are happening now between representatives of the European Parliament and representatives of the European member states. There is, I think, a good amount of goodwill to try and reach a final agreement this year and to not have those negotiations carry over into 2023.
“The law will come into force as soon as it’s published in European statute books. But within the law itself, there is a transition period of 12 months or it might become 18 months before the provisions that apply to EU companies and towards the products that it covers, come into force,” said Forest Risk Commodities analyst Micheal Rice of Clientearth — a London based environmental NGO.
The proposed regulation makes companies responsible to conduct comprehensive due diligence, in order to prove that their products are not linked to deforestation or forest degradation.
“Main points of disagreement about the regulations are about whether natural ecosystems beyond forests should be protected, whether commodities like rubber and maize should be included, whether the finance sector should also be required to do due diligence on the deforestation risks of their services,” added Rice.
However, he added that the European Commission is currently actively engaging with major palm oil producers including from Malaysia, to seek input before passing the regulation next month.
On Nov 17, 2021, the EU published a legislative proposal for a regulation on deforestation-free products.
The Malaysian Palm Oil Council (MPOC) have urged the EU Parliament in the past, to acknowledge national certification programmes like the MSPO standards as an effective measure to meet the requirements of the regulation.
The council said the MSPO stands ready to meet the requirements of the deforestation regulation.
It said this level of certification is more than adequate to meet the requirements of the EU’s deforestation regulation, as Malaysian exports of palm oil to the union are covered under the MSPO, as well as third-party voluntary schemes.