The European Union's (EU) new rules aimed at curbing deforestation have raised concerns over their potential "catastrophic" impact on global trade if not implemented with consideration for small producers and developing nations, according to the head of the International Trade Centre (ITC).
Pamela Coke-Hamilton, the Executive Director of the ITC, a collaborative agency of the United Nations and the World Trade Organization, expressed apprehensions in an interview with the Financial Times. She noted that the prohibition of goods linked to deforestation entering the EU could inadvertently benefit large companies capable of tracing their product origins, while potentially sidelining smaller suppliers.
Coke-Hamilton emphasized the risk of major producers disconnecting from small farmers due to challenges in traceability. This development could disrupt supply chains and trade relationships. Notably, countries such as Brazil, Honduras, Indonesia, and Malaysia, which are significant exporters of products like coffee, palm oil, and rubber, could be adversely affected by these regulations.
The impending legislation, set to take effect by the end of next year, marks a global first by banning imports of products associated with deforestation. This includes commodities like cattle, cocoa, coffee, palm oil, soya, wood, and rubber. The EU's environmental agenda, as outlined by President Ursula von der Leyen in 2019, aims to achieve net-zero greenhouse gas emissions by 2050.
The ITC chief highlighted the potential for the EU's deforestation rules to either have a "catastrophic" or acceptable impact on global trade, contingent on how well the EU engages with developing nations.
While acknowledging the EU's commitment to addressing the climate crisis, Coke-Hamilton expressed concerns about the potential burden the legislation might impose on small producers. She also underlined the need to prevent a cycle of poverty and deforestation.
The EU's regulatory approach involves categorizing countries based on their risk levels of deforestation or degraded forests. Customs checks will be more rigorous for goods originating from high-risk areas where forests have been depleted or damaged since 2020.
As the EU moves forward with the implementation of these rules, stakeholders, including smallholders and indigenous communities, will continue to monitor their impact and review the legislation's effectiveness.
