Europe’s EUDR: How does this anti-deforestation regulation impact countries globally?

In light of rampant environmental destruction worldwide, massive extraction of resources in the name of business activities must be halted. In 2023, the EU adopted the European Union Deforestation-free Regulation (EUDR) to address deforestation across value chains. What is it, and how does it affect countries across the globe?

The EUDR

In 2022, the world lost 3.7 million hectares of primary forest. Deforestation is mainly driven by land expansion for agricultural purposes, including for cattle, field crops, and palm oil. Unsustainable practices linked to deforestation can happen at each stage of value chains, from production and distribution of goods and commodities.

As a major player in the global economy, the European Union has a significant responsibility to help solve this issue. The region adopted the EUDR in June 2023 with the primary aim of addressing all deforestation and forest degradation. The regulation mandates that those who put their commodities on the EU market or export from it must be able to prove that the products are not sourced from deforested land or do not contribute to forest degradation.

The EUDR will apply to products entering the EU market starting 30 December 2024, allowing companies an 18-month transition period since the regulation was first adopted. Meanwhile, micro and small enterprises have a longer transition period of 24 months, and the regulation will apply on 30 June 2025.

Worldwide Responses

Since its adoption, countries have been expressing concerns about the possible impacts of the EUDR on their economies.

For instance, in September 2024, the Brazilian government sent a letter to the European Commission conveying how the regulations could affect almost one-third of Brazil’s exports to the EU. In 2023, Brazil’s export of forest-derived products reached $46.3 billion.

Similarly, Indonesia and Malaysia are also heavily impacted by the EUDR. Both countries collectively account for 85% of global palm oil production, a livelihood source for roughly 2.6 million smallholder farmers in Indonesia and over 300,000 in Malaysia.

Both Indonesian and Malaysian governments deem the EUDR discriminatory towards smallholder farmers, as they often face difficulties obtaining necessary certifications to comply with the regulations compared to established companies. The countries filed separate complaints to the EU and the World Trade Organization over the policy, which ended in the EU winning.

A Healthy Balance

The rising global demand for goods and commodities combined with the current state of environmental degradation means that business as usual is no longer possible. Regulations that uphold sustainability principles, like the EUDR, are essential to create significant changes in global trade. However, to truly become sustainable, measures have to be taken as well to ensure equity in the social and economic aspects of global business.

Editor: Nazalea Kusuma

Kresentia Madina

Reporter at Green Network Asia | Website | + posts

Madina is the Assistant Manager of Stakeholder Engagement at Green Network Asia. She holds a bachelor’s degree in English Studies from Universitas Indonesia. As part of the GNA In-House Team, she supports the organization's multi-stakeholder engagement across international organizations, governments, businesses, civil society, and grassroots communities through digital publications, events, capacity building, and research.