The Australian government, led by the recently appointed Minister of Agriculture Julie Collins, is in conflict with the EU over the EUDR. Like Brazil, Canada, and Columbia, Australia claims that Brussels is using inaccurate maps to measure deforestation.
This problem stems from Australia's race against time to convince the EU that tree cutting should not be considered "deforestation," a crucial definition that could endanger millions of cubic meters of timber that are sold to the EU directly or through third countries, as well as a small but lucrative market.
Speaking to the Financial Times, an official from Australia's embassy in Brussels stated that EU operators and relevant authorities should use a variety of information sources when determining whether deforestation has occurred, rather than viewing the EU's map as the only source of truth.
The main point of contention is whether the EUDR would accept the 2020 EU Observation on Deforestation and Forest Degradation, which uses a different definition of forested areas, or Canberra's Forests of Australia Map, which was published in 2023.
Australia is not alone in its concerns; officials in China, the US, New Zealand, Brazil, Canada, Columbia, Indonesia, and Malaysia have all issued warnings about global supply chains, and 20 out of 27 European Agricultural Ministers have called for a delay in the rules' implementation.
According to the Australian embassy, several EU member states have not yet appointed a national body to supervise imports, and Brussels has not yet released guidelines on how to comply with the new regulations.
The embassy also noted that, in order to account for shipping times, Australian producers must get ready for exporting to Europe months ahead of the deadline. However, there are still a number of major unknowns, including the definition of what constitutes primarily agricultural land use. Australia is now arguing in favour of delaying the rules' implementation until all prerequisites are satisfactorily understood and firmly established.
Pedro Miguel da Costa e Silva, Brazil's ambassador to the EU, stated that the country's private sector has several examples of commercially cultivated tree plantations, cocoa and coffee plantations, and other land being incorrectly designated as forests. He continued by saying that because European operators and authorities are not collaborating with local monitoring systems, which have far higher accuracy rates, producers would now need to invest millions of dollars in private compliance systems.
EUDR Compliance Costs, and the Importance of Traceability
The significant regulatory challenges that global forest producers must navigate could push the estimated compliance costs for the EUDR to as high as US $2.5 billion. The EU expects that these costs will be absorbed by reduced profits for those involved in the value chain, ultimately being passed on to the final consumers.
To address these challenges, iov42 launched Interu, a technology specifically designed to combat global deforestation. According to the company, only 18% of the global timber importers surveyed were aware of the EUDR or the potential costs of compliance.
Anna Roberts, Head of Market Development at iov42, who is currently working with the EUDR, the UK Environment Act, the US Forest Act, and the Japan Clean Wood Act, revealed that 59% of importers lack sufficient funds for traceability. As a result, half of the global timber importers surveyed have adopted a "wait and see" approach to due diligence.
Roberts emphasized that neglecting due diligence could lead to serious consequences, including reputational damage and fines of up to 4% of sales for violating the EUDR. Roberts also noted that 67% of European timber companies surveyed believe the EUDR will require new tools and techniques but will ultimately enhance market share. At the Innovation Zero World Congress, Roberts emphasized that traceability is at the core of the EUDR, highlighting four key components: advanced technology, ecosystem collaboration, data trust, and equitable data dissemination.
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Conclusion
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