This month, Malaysia joined 16 other commodity-producing nations in writing a letter to the European Union raising serious concerns about the approach the bloc has taken on the EU Deforestation Regulation (EUDR).
The letter is part of a broader trend of discontent with the Regulation among the global south and developing world and follows a July 2022 letter in which 14 countries wrote to the EU warning that the EUDR would “generate trade distortion and diplomatic tensions, without benefits to the environment”. The new letter, with an expanded list of signatories, is clearly a sign that the developing world does not feel the EU is listening to their concerns.
Specifically, last week’s letter raises serious concern that the EUDR’s unilateral country benchmarking system – which would see some nations unjustly labeled as ‘high-risk’ for deforestation – is “inherently discriminatory and punitive” and “potentially inconsistent with WTO obligations.”
The joint letter also “urges measures to prevent trade disruptions, including reducing excessive administrative burdens associated with geolocation and traceability requirements certifications, and customs procedures.”
The EUDR’s traceability requirement is of particular concern because it dictates that detailed information on the origin of all products must be provided, yet it “disregards local circumstances and capabilities, national legislations, certification mechanisms, the efforts to fight deforestation, and multilateral commitments” that provide these assurances from producer countries.
Industry experts estimate that the level of detailed information the EUDR demands would require the analysis of as many as 500,000 individual data points for a single shipment – an enormous amount of bureaucracy, which will be difficult even for the largest and most sophisticated supply chains.
While these traceability requirements are burdensome on all actors within a supply chain, the negative impact the EUDR will have specifically on smallholders – of which only those who operate on land under 4ha are granted an exemption – is extraordinary. Millions of smallholders throughout the developing world depend on the cultivation of oil palm as well as other products covered under the EUDR’s requirements – such as cattle, wood, cocoa, coffee, and rubber – to support their families and rural communities. In Malaysia alone, more than 450,000 palm oil smallholders would be negatively affected by the Regulation.
The letter’s signatories explain that these smallholders are “especially vulnerable” to the EUDR because they may not have the financial or technological means to “show compliance with the stringent requirements” which would, in turn, see them “end up being excluded from international value chains”. Their exclusion from these value chains would have immense negative impacts “such as increased poverty, diversion of resources, and hindrance of the attainment of SDGs.”
Due to the outsized impact the EUDR will have on the developing world, the signatories of the letter have called for the Commission to “formulate clear and detailed implementing acts and guidelines” that take into account the concerns and constraints of producing countries – and in particular the challenges faced by their smallholders.
The letter does remind EU leaders that the Commission has been warned on many occasions about the potential negative effect on smallholders, and that the legislation ignores the EU’s commitments to SDGs. The unspoken question is whether the EU has decided to give up on that commitment in the implementing acts, because the EU has thus far instead adopted a “one-size-fits-all approach …[which] ignores the different local conditions and will inevitably impose immense costs.”
If the EU has indeed decided to withdraw from its previous commitments to support poverty eradication and economic growth in the developing world, that is a great shame for all concerned.
Malaysia has warned that the Deforestation Regulation is a “strategic error” that places an immense strain on the EU’s relationship with the developing world, and has repeated its own calls for cooperation and dialogue to address the most concerning aspects of the EUDR. It was joined by all signatories in closing the letter with a call for the EU to “engage in effective cooperation and meaningful dialogue” with its trading partners throughout the implementation phase of the Regulation.
Indonesian President Joko Widodo (Jokowi) has demonstrated strong public opposition to EUDR as well. Only a few days ago, President Jokowi asked the Dutch government to “encourage the abolition of the EUDR” in a bilateral meeting on the sidelines of the G20 Summit.
The publication of the letter from 17 governments, as well as public comments from President Jokowi and other leaders, demonstrates that Malaysia is one of many, many nations expressing concerns about the EUDR. This is not a bilateral Malaysia-EU issue: it is a call for action from across the developing world.
The EU has not responded to many of the comments expressed nor the recent letter, and momentum against the EUDR from the global south is sure to grow further until the most serious of their concerns are addressed and assurances are provided that the Regulation will not destroy the critical industries Malaysia and the 16 other nations rely on to support their economy and their people.