(Bloomberg) -- Europe forged its plan to curb global deforestation three years ago when more than 100 world leaders pledged at the COP26 climate conference to reverse the destruction of millions of hectares of woodland every year.
There was an aggressive timetable, but as with many of the European Union’s green plans, it proved too much for some, and the bloc on Wednesday caved to calls from countries including Brazil and the US to slow down.
The decision to delay deforestation targets symbolizes the bloc’s overreach when it comes to persuading the world to follow in its green footsteps. It’s the result of ambitious environmental aims clashing with hard reality. Businesses said they needed time and money to get ready for the huge change the EU envisages, as did emerging economies.
Over $110 billion of trade was set to be affected by the EUDR, which aimed to end the chopping down of forests as a result of the EU’s insatiable thirst for commodities such as coffee, cocoa, soy and beef.
The 12-month shift in the timetable, pushing the start out to the end of 2025, follows months of intense pressure from global trade partners, commodity suppliers and even EU member states who had signed up less than two years ago.
But a lot has changed since then, and Europe’s Green Deal has become more politically and economically challenging.
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Across Europe, right-wing parties are in the ascendancy and calling for less red tape and a greater focus on competitiveness, rather than green ideals. On multiple occasions, farmers have driven their tractors into Brussels, the EU’s capital, to complain that inflation in the wake of Russia’s war in Ukraine and excessive regulation is forcing them to the brink of bankruptcy.
Globally, countries have become more vocal on what they see as European interference. Alongside deforestation rules, the EU is also in the process of slapping a carbon border levy on carbon intensive products like steel and cement from countries with less strict climate rules, and wants production of packaging outside its borders to conform to the same rules as within it.
“The world, in reality, probably needs 3-5 years if governments begin to address this seriously,” said Jason Clay, executive director of the WWF’s Markets Institute. “The EU has made its shot across the bow and gotten the world’s attention, but now it needs to give some time to others to make this work.”
The deforestation regulation became a cause celebre for those saying that the EU was inflicting too much paperwork on global commodity producers and domestic importers. Manfred Weber, the chair of the center-right European People’s Party — the largest group in parliament — said that it had become a “bureaucratic monster.”
With less than three months to go until its implementation, the commission still hadn’t published guidelines on how operators should comply with the rules. It did so alongside the delay Wednesday.
An information system was tested last week, but there was still concern over whether it would work smoothly. One German timber importer had already pledged to stop imports from China over fears that they would be subject to rigorous checks and China wouldn’t supply geolocation data to help meet the new standards.
Under the system, every coffee bean, carcass of beef and log of wood — along with such things as chocolate, tires and books — will have to be traced or face hefty penalties. Developing countries complained that smallholder farmers wouldn’t be able to show they were complying with the rules.
Indonesia called it a form of “regulatory imperialism.” EU officials countered that exact locations of farms could be easily done with a phone and was not “some significant ask.”
“Small businesses and countries need guidance on how to comply, as well as the capacity and financing needed to act,” said Pamela Coke-Hamilton, executive director of the International Trade Centre. “There’s no panacea, yet there is a way to make the regulation work for as many as possible: Roll it out with accompanying measures that complement existing national and regional initiatives.”
A major source of ire came from the US and EU member states. One issue was a delay to a planned ranking system and a decision to class all countries as a “standard” risk, even those without the issue of deforestation. That would mean additional paperwork and checks for everyone, including, for example, US producers of pulp, a key component of everyday goods like diapers.
Most countries will be classified as low risk when the system is up and running next year, according to the commission.
Wednesday’s controversy fits with one message coming from Commission President Ursula von der Leyen in her second term. Von der Leyen, the architect of the green deal in her last mandate, has pivoted to supporting businesses through the transition by cutting red tape amid widespread fears of an exodus from the region.
She also says she wants to keep the overall green plans on track, but environmental groups are skeptical. They say the delay is a blow to the EU’s credibility and worry that it sets a dangerous precedent for other climate measures.
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The delay “is a frontal attack on the Green Deal,” said Anna Cavazzini, a European Parliament lawmaker in the Green group. “We must now ensure that the postponement does not open Pandora’s box and that the law is not weakened.”
--With assistance from Áine Quinn and Jorge Valero.
(Updates with additional comments from the ITC)
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