The International Trade Council (ITC) welcomes the European Union's new landmark law obligating EU-based companies to ensure their imports and exports are "deforestation-free" and respectful of human rights.
The newly adopted European Union Deforestation-Free Products Regulation places the responsibility on companies registered in EU member states to confirm that seven key agricultural commodities - cattle, cocoa, coffee, oil palm, rubber, soy, and wood - and various derived products like chocolate and leather, are not produced on land deforested after December 31, 2020. This law mandates companies to trace commodities back to their original production source.
This regulation also requires companies to validate that these commodities are produced in accordance with "relevant laws" in their country of origin. These include laws on land-use rights, labour rights, human rights under international law, and the right to free, prior, and informed consent, as outlined in the United Nations Declaration on the Rights of Indigenous Peoples, as well as anti-corruption laws.
Annually, the EU imports billions of euros worth of timber and agricultural commodities globally. Such commodities may sometimes be marred by child labour, forced displacement of rural communities, and killings of environmental defenders. This law now necessitates that companies eliminate labour and human rights violations from their supply chains or face potential legal ramifications in EU courts.
Within 18 months after the regulation becomes effective, the European Commission will categorise producer countries as low, medium, or high risk based on their deforestation rate and the existence, compliance with, and effective enforcement of laws protecting human rights, Indigenous peoples' rights, local communities, and other customary tenure rights holders.
Products from countries identified as "high risk" will undergo more stringent scrutiny by EU customs authorities, and European companies will need to exercise heightened due diligence when sourcing from these regions.
The ITC views the European Union Deforestation-Free Products Regulation as a significant step forward, though its success will depend on rigorous implementation by all EU member countries. This includes the creation of effective avenues for redress for victims of rights abuses, and the EU’s support to trading partners to ensure compliance. It is paramount for the European Commission to resist political pressures to ensure accurate benchmarking and effective enforcement of the regulation.