EU Deforestation-free Regulation – The EU’s Attempt to Combat Deforestation in ASEAN Using Non-Trade Measures

The EU Deforestation-free Regulation (EUDR) entered into force on 29 June 2023, obliging companies to ensure products sold in the EU have not led to deforestation and forest degradation in their production. Companies will only be allowed to sell products in the EU if the supplier of the product has issued a due diligence statement confirming that the product does not come from deforested land or has led to forest degradation. In addition, companies will have to verify that these products comply with relevant legislation of the country of production, including on human rights, and that the rights of affected indigenous people have been respected. While the regulation has entered into force, the main prohibitions and obligations will not apply until 30 December 2024.

The EUDR will cover imports of various commodities, including cocoa, coffee, palm oil, and rubber, plus products derived from them, such as chocolate, tires, and shoes. Within ASEAN businesses from Vietnam, Indonesia, and Malaysia stand to be most affected by the new law. Vietnam is a large coffee exporter, and while some Vietnamese businesses have been prescient to build deforestation-free supply chains over the past years, the Vietnam Coffee Cocoa Association estimates that the EUDR would raise new challenges for around 1.3 million coffee farmers in the sector. 

After several interventions from the governments of Indonesia and Malaysia, who are major exporters of palm oil, the Commission has agreed to set up a joint task force to enter in dialogue with both countries. The joint task force comprises representatives from the governments and relevant stakeholders from both countries, including relevant commodities associations, smallholders, workers associations, and civil society organisations, amongst others to enhance dialogue on supply chain traceability and transparency and will “support coordination and promotion of mutual understanding between Indonesia, Malaysia, and the European Union.” The terms of reference include issues such as the inclusivity of smallholders in the supply chain, national certification schemes (land legality and cut-off date for deforestation), traceability from producer to end-consumer, scientific data on deforestation and forest degradation, and protection of data. The first meeting of the task force took place in the beginning of August while the next meeting is tentatively scheduled to take place at the end of November.

ASEAN exporters of agricultural products are advised to understand the EUDR and its obligations, and to seek advice if necessary.