• EU legislators agreed on a pioneering law to ban imports of products linked to deforestation
• European Parliament negotiators achieved inclusion of palm oil-derived products but failed to add maize and biodiesel
• Green NGOs welcomed the news but warned of loopholes and loose protection of human rights

The EU has agreed on a new regulation that will ban the import of agri-food products linked to deforestation or forest degradation across the 27-bloc.

After a long night of negotiations, on Tuesday (6 December), Members of the European Parliament (MEPs) and the EU Council reached an agreement on the final legislative text, which will oblige companies to ensure that the commodities covered by the proposal do not come from deforested land.

According to United Nations data (UN), EU consumption is responsible for 10% of global deforestation, with palm oil and soya accounting for more than two-thirds. The bloc is also the second largest importer of products associated with tropical deforestation - only surpassed by China.

The new law will impose mandatory due diligence requirements for a list of commodities proposed by the European Commission last year: cattle, cocoa, coffee, palm oil, soya and wood, and some derived products such as chocolate, leather, and furniture. The rules will apply to all products manufactured after 31 December 2020.

In addition, MEPs successfully pushed for the inclusion of rubber, charcoal, printed paper products, and several palm oil derivatives. However, EU lawmakers failed to add other agri-food commodities, such as sheep, goats, pork, poultry, and maize.

While maize and biodiesel are not included in the final legislation, the European Commission vowed to consider their inclusion in a future revision of the law.

Luxembourgish MEP Christophe Hansen (EPP), the Parliament's lead negotiator, said legislators "delivered a strong and ambitious result" just hours before the start of the UN biodiversity conference - COP 15 - in Montreal.

"I hope that this innovative regulation will give impetus to the protection of forests around the globe and inspire other countries at the COP15," he added.

Virginijus Sinkevičius, the EU Commissioner in charge of Environment and Oceans, welcomed the deal and described the regulation as "the first law in the world to fight global deforestation."

"We take responsibility for our EU production and consumption in a historic moment to protect the world's forests," Sinkevičius tweeted.

NGOs warn of loopholes

Meanwhile, EU environmental groups praised the pioneering legislation but warned about a series of loopholes that could undermine the regulation's ambitions.

WWF Europe described the law as "groundbreaking" but regretted that decision-makers did not support the Parliament's proposal to extend the rules to other wooded lands, which do not fall under the definition of forest. The Commission vowed to consider their inclusion one year after the implementation of the law.

Within two years, the EU executive will also consider the feasibility of including other vulnerable ecosystems, such as savannahs and wetlands, which are "under immense pressure" from agricultural conversion, according to WFF.

Commenting on the final text, Greenpeace EU spokesperson John Hyland said the law is "a major breakthrough" for forests and will "make some chainsaws fall silent". However, he lamented that EU governments made concessions to protect the forestry industry.

Greenpeace claimed that "under pressure from the European forestry sector and the Canadian government," the EU adopted a "loose definition" of forest degradation, as it only addresses the conversion of a primary - untouched by human activity - or regenerating forest into a plantation.

Earlier this year, ministers in the EU Environment Council voted to narrow the definition of "forest degradation" and exclude other ecosystems under threat, as the legislation could impact their own wood production.

"EU governments should be ashamed of themselves for adding loopholes for their logging industries and giving flimsy protection for the rights of Indigenous People who pay with their blood to defend nature, but rest assured - we're coming for them next," Hyland added.

MEPs make concessions

The Parliament succeeded in adding the protection of human and indigenous rights in the obtention and manufacturing of these products. However, according to NGOs, the measure falls short of ensuring the respect of international conventions and only forces companies to verify compliance with the country's national legislation.

"If certain rights of Indigenous peoples or local communities are not reflected in national legislation, they will not be protected under the EU law either," reads WWF's statement.

Despite the achievements of MEPs, the Parliament had to concede on the inclusion of financial institutions in the legislation. Lawmakers wanted to ensure that companies contributing to deforestation did not receive financing from EU-based banks, but the proposal did not make it to the final draft. The European Commission will consider the measure in a review of the law within two years.

The rules will come into force 20 days after their formal adoption by the European Parliament and national governments, which is expected to happen early next year.

-- Sofia Sanchez Manzanaro

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.