TWN Info Service on WTO and Trade Issues (Sept24/12)
24 September 2024
Third World Network

WTO: Will the EU consider dropping its unilateral deforestation measures?
Published in SUNS #10081 dated 24 September 2024

Geneva, 23 Sep (D. Ravi Kanth) — Several members, including the United States, have raised fundamental objections  at the World Trade Organization against the European Union’s “deforestation and forest degradation strategy”.

The EU’s proposed deforestation measures that are expected to come into effect on 30 December are allegedly replete with unilateral actions, an issue that could undermine Brussels’ credentials as a follower of the rule-of- law processes set out in the WTO’s rule- book, said people familiar with the development.

It appears that the WTO Director-General, Ms Ngozi Okonjo-Iweala, intervened on this issue to request the EU to consider delaying the proposed deforestation measures, said people familiar with the development.

She may be aware of Brussels’ thinking on this issue, and it is likely that the EU could reconsider its position on this allegedly unilateral measure, said a trade envoy, who asked not to be quoted.

The EU’s “deforestation and forest degradation strategy” is expected to come up for discussion at the WTO’s Committee on Agriculture on 25 September.

Several countries including the United States, New Zealand, Canada, Australia, India, Indonesia, Paraguay, and Ecuador among others raised several questions, requesting the EU to provide more clarification on its deforestation and forest degradation strategy.

In document G/AG/W/249, the US, Canada, Australia, and New Zealand said that while they share “the EU’s desire to address global deforestation, and to halt and reverse global forest loss,” they are “deeply concerned about the significant impact that the implementation of this regulation will have on global trade, and the high compliance burden it places on countries and producers whose systems are not linked to deforestation.”

The US, Canada, Australia, and New Zealand maintained that “it is our firm view that this is not the most trade facilitative approach to achieve the objective of protecting global forests.”

The four members argued that they “are further concerned about the wide range of outstanding questions and issues that need to be addressed before implementation that limit the ability for suppliers and operators to prepare, including legal clarity around definitions, the operation of information systems and competent authorities’ processes.”

The US, Canada, Australia, and New Zealand said they hold “a systemic concern about the prescriptive nature of the measure and the disregard for local conditions of production.”

On behalf of the four countries, New Zealand said that it “believes that a more effective approach would involve WTO Members working together collectively, rather than contributing to the proliferation of unilateral initiatives which cause trade disruption and risk fragmenting the international trading system.”

The four countries sought further information from the EU on:

a. “Whether the EU will delay the implementation of the regulation past 30 December 2024 given we still do not have certainty on many essential parts of the Regulation, to give time to address stakeholders’ concerns and to ensure systems are able to comply with the regulation?”

b. “Whether the EU has further considered the need to prevent the imposition of undue barriers to trade for countries with strong forest management credentials?”

“We also encourage the EU to consider how it could advance dialogue multilaterally on trade responses to environmental challenges,” the four countries said.

India raised several questions, noting that “the EU deforestation regulation (EUDR) entails due diligence procedures including the certification for deforestation-free production of the covered commodities.”

New Delhi asked whether the EU could “clarify if its regulation is intended to eventually replace the existing certification schemes in the export countries”.

India also asked that “given the existing uncertainties regarding EUDR’s implementation procedures, is the EU considering reassessing the measure or postponing its entry into force?”

Indonesia, Paraguay, and Ecuador also raised questions over the EU’s measures.

Indonesia said it continues to have concerns “surrounding the European Union Deforestation-Free Regulation (EUDR), especially regarding the implementation of EUDR that will soon be mandatory.”

Indonesia expressed sharp concern that the EU “has not provided enough information for the implementation of this policy, and thus leaving producing countries with very short [adaptation] and preparation period.”

Earlier, the EU claimed that Brussels “will develop the country benchmarking system based on the availability of transparent data in the country.”

Indonesia asked, “how will the EU resolve if there are discrepancies or lack of data availability among importers, manufacturers, and exporters around the sourcing of goods?”

Indonesia further asked, “to ensure compliance, what deforestation standards will be used?”

Indonesia, Paraguay, and Ecuador also highlighted the following:

1. “Could the EU provide further information about the progress of the methodology developed by the Multi- Stakeholder Deforestation Platform regarding the main criteria for assessment in country benchmarking?”
2. “How can the EU guarantee that the assessment regarding criteria such as information supplied by governments and third parties (NGOs, industry) is valid?”
3. “The regulation requires EU businesses placing wood, coffee, cocoa, palm oil, and several other commodities in the EU market to demonstrate that these goods aren’t linked to deforestation. In practice, the burden of supplying data to show compliance will fall largely on suppliers, many from countries where small- and medium- sized firms predominate. Although we are currently in the process of registering certain aspects of our small producers related to the EUDR, we would like to proceed at a faster pace since time is short. As such, could the EU provide support and facilitate international cooperation through knowledge, resources, and technological solutions?”
4. “Has the EU prepared any solutions and assistance aimed at developing the capacities of our regional and local governments, which will be critical in assisting our small producers and exporters in meeting the required standards?”

In short, the EU, which often claims that it adheres to the WTO’s rule-book, appears to be treated as one of its main violators, said people familiar with the development.

NFIDCs & LDCs

On another major issue concerning net food-importing developing countries (NFIDCs) and least-developed countries (LDCs), the US appears to remain silent even though it is a major donor to the NFIDCs, while Costa Rica and Paraguay appear to be causing systemic problems by calling for the reclassification of NFIDCs, said people familiar with the development.

The Committee on Agriculture adopted a decision (G/AG/3) in November 1995, titled: “Decision by the Committee on Agriculture at its Meeting on 21 November 1995 Relating to the Establishment of a List of WTO Net Food-Importing Developing Countries for the Purposes of the Marrakesh Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on the Least Developed and Net Food- Importing Developing Countries.”

The title is rather self-explanatory as it mentions the possible negative effects of the Uruguay Round Agreement on Agriculture, and accordingly, NFIDCs and LDCs are provided with enhanced flexibilities.

The latest revised list of NFIDCs and LDCs (G/AG/5/Rev.12), which was agreed in March 2023, has admitted Tonga, an LDC, as a new member.

At present, the members in the list include Antigua and Barbuda, Barbados, Botswana, Cote d’Ivoire, Cuba, Dominica, Dominican Republic, Egypt, El Salvador, Eswatini, Gabon, Grenada, Honduras, Jamaica, Jordan, Kenya, Maldives, Mauritius, Mongolia, Morocco, Namibia, Pakistan, Peru, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Senegal, Sri Lanka, Trinidad and Tobago, Tonga, Tunisia and the Bolivarian Republic of Venezuela.

Against this backdrop, Costa Rica and Paraguay, who are members of the Cairns Group of farm-exporting countries, not only oppose requests from any new LDC to be included in the list but also insist on the reclassification of the NFIDC members, said LDC farm negotiators, who asked not to be quoted.

According to several LDC negotiators, it appears that Costa Rica and Paraguay seem determined to overturn the 1995 decision.

These two countries are apparently causing a systemic crisis at the WTO in denying the much-sought after flexibilities to the most disadvantaged LDCs, the LDC negotiators said. +