Update – Regulation on deforestation-free supply chains
The legislative process for the proposed regulation on deforestation-free supply chains dated 17 November 2021(as we reported) at Green Deal is moving forward. The first reading in the plenary session of the EU Parliament took place on 14 September 2022, with members at the plenary session agreeing to a compromise proposal that would significantly expand the scope of the draft. In June, the Council of Ministers had already published a explanatory memorandum on the EU Commission’s proposed regulation, which may speed up the legislative process. This shows the relevance of the issue at the EU level.
Even before the first reading of the draft regulation in the plenary session of the European Parliament, the Council of the European Union had already agreed on a so-called “general approach” (political agreement) on 28 June 2022, representing the starting position for the Council’s further negotiations in the legislative process. In this context, the Council agreed on a moderate extension of the scope of the regulation, so that the relevant products listed in Annex I will in future also include charcoal, wood wool and wood flour. According to the Council’s memorandum, binding due diligence requirements should apply to all market participants and traders. In preparing due diligence declarations, SMEs are given the option of relying on larger economic operators. At the same time, the thresholds for mandatory controls by competent authorities and minimum control levels were reduced. Furthermore, the establishment of a benchmarking system was agreed upon according to which the deforestation risk in the EU as well as in third countries is to be classified into three categories: “low”, “normal” and “high”, on which both the scope of the audit intensity by the authorities and the scope of the due diligence requirements to be complied with by the economic actors are to be based in the future. Moreover, a stronger focus was placed on human rights.
The European Parliament also adopted its position in the first reading on 14 September 2022, and approved a compromise proposal from the Parliament’s ENVI Committee that is significantly stricter than the Council’s demands. This provides for a significant expansion of the material scope of application and would like to see pork, sheep and goats, poultry, corn, rubber, charcoal and printed paper products regulated as raw materials and/or products in the future. Of particular practical significance is that the applicable date by which the new rules must be observed has been moved up by one year from 31 December 2020 to 31 December 2019, which means that no raw materials and/or products based on deforestation or forest degradation may be placed on the market after the new regulation comes into force. There is agreement with the Council that greater focus must be placed on human rights and the rights of indigenous peoples.
Conclusion
It remains to be seen whether the Council will accept the Parliament’s position and adopt the regulation in a timely manner. What is certain is that a regulation is coming. However, due to the obviously massive differences between the various positions, further negotiations and a second reading in parliament are likely to be necessary, which could take place as early as within three months. In any case, with the new proposed regulation, the EU is making it clear that it is very serious about protecting the environment and species.
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