Top Ag Ports and Carriers
Special Report failed execution ” of the law and to enable a more realistic approach to addressing global deforestation .
“ We need solutions that recognize US sustainable forestry management practices and enable our producers to comply with the intent of the EU deforestation-free regulation without disrupting trade between the EU and the US ,” Pitts told the Journal of Commerce .
The US exported 56,185 TEUs of pulp and paper to Europe in the first five months of 2024 , 41 % of which went through the Port of Savannah , according to data from PIERS , a sister company of the Journal of Commerce within S & P Global .
A ‘ bureaucratic monster ’
The anti-deforestation regulation has come under fire from at least 20 of the EU ’ s member states . In late June , Peter Liese , environmental spokesperson for the European People ’ s Party , called the regulation a “ bureaucratic monster ,” arguing that it would effectively bar small farmers from exporting their products to Europe .
The EU imported $ 3.5 billion worth of pulp and paper products from the US last year . Shutterstock . com
Lehmacher said that although the EUDR is a necessary step toward bringing change to a self-destructive economic system , it will have negative consequences .
“ The EUDR will drive consumer prices up and potentially EU demand down as the regulation increases complexity and cost , particularly for those that import from high-risk regions ,” including parts of South America , Southeast Asia and Africa , he said .
For the EUDR to work as intended , and to avoid encouraging non-compliance , the regulation “ must be pragmatic and practical ,” Koray Köse , chief industry officer at predictive risk firm Everstream Analytics , told the Journal of Commerce .
“ The proof burden is on the importer , not on the EU ,” Köse said , noting that the regulation will be expanded over time to cover additional commodities . “ The EU is still busy with the regulation ’ s documentary requirements and processes , but there will be real consequences once those processes are defined , and an importer will basically be required to be compliant overnight .”
However , a significant lack of data , particularly from lower-tied suppliers , could encourage some shippers of the affected commodities to try to skirt the rules and others to forgo doing business in Europe altogether . Citing data from management consultancy firm Gartner , Köse said shippers have 90 % visibility into their Tier 1 suppliers , but just 30 % visibility for Tier 2 and a measly 6 % for Tier 4 .
“ The EU can ’ t say everyone must follow the rulings even though there is not enough data available to limit deforestation ,” he said . “ That will inflict non-compliance because under the paradigm of ‘ business must go on ,’ you will see companies start to provide fake geolocation data .”
“ It is not about what and why , but how EUDR is implemented .”
In that sense , the EUDR could serve as “ a catalyst for visibility technology ,” Köse said .
“ If I were a shipper and did not want to invest in technology to manage this process , I would stay away from shipping into Europe ,” he said .
Lehmacher suggested the EU take a phased approach that would allow for improvements to the rules as currently written , as well as the introduction of additional fields like mining .
“ The regulation itself is considered by some as too narrow , [ and ] the definition of deforestation and forest degradation are seen as weak ,” he said , adding that the Dec . 31 , 2020 , cutoff date ignores significant deforestation activities between 2000 and 2020 .
“ It is not about what and why , but how EUDR is implemented and how unwanted side effects are mitigated ,” Lehmacher said . “ The ability of consumers and businesses , in particular smaller businesses and poorer citizens , to absorb complexity costs and higher prices is limited .”
email : greg . knowler @ spglobal . com www . joc . com September 9 , 2024 | Journal of Commerce 49