With effect from 2025, Europe has passed bills to ban the import of items related to deforestation. Accordingly, importers and exporters will have to trace the origin of imported products sold on the European market, whether they are produced in areas with deforestation or not.
This new law certainly will have a major impact on both large and SME enterprises in Asia.
On 19 April, the European Parliament (EP) approved a new law banning the import of goods related to deforestation to boost global efforts to combat climate change. Accordingly, the new law will apply to coffee, cocoa, soybeans, sawn timber, palm oil, cattle meat, printing paper and rubber, and derivative products from countries worldwide. As a result, products in this group involved in deforestation will be banned from being imported into the EU. In addition, businesses exporting such products to Europe will have to provide product certification.
Specifically, businesses are required to provide in-depth due diligence and verifiable information that their products were not grown or cared for on vacant land acquired through deforestation after 2020. EU authorities will conduct checks according to the exporting country’s risk rating. Violating businesses will be severely fined, which can be fined up to 4% of annual turnover in an EU member state. However, even though it has been passed, the new EP law still needs consensus from EU countries before it can officially take effect. After EU approval, businesses will have 18 to 24 months to implement the regulations.
According to the plan, around December 2024 or January 2025, the bill to ban the import of agricultural products with production processes that reduce the forest area will take effect. Meanwhile, small and medium enterprises are given an additional 6 months to adjust to this new law.
Countries like Indonesia and Malaysia which are major producers of palm oil, coffee and cocoa have slammed the new EU deforestation law as unjust, as these will impact their food industries especially those run by smaller and medium stakeholder enterprises. Both countries view the law as a ‘deliberate effort’ to increase costs and barriers for the palm oil sector, a key source of export revenue for both countries, while protecting the EU oilseeds markets which is high cost and inefficient. Palm oil is used in almost everything from lipstick to pizza.
