EUDR: “Switzerland would do well to get actively involved”

Interview: Gaby Allheilig

Brussels wants to curb global deforestation with the EUDR. The EU is receiving both praise and criticism for the law. Do you view the EUDR as a milestone or a stumbling block?

Astrid Zabel: I see it as a double-edged sword. For environmentally conscious consumers in the EU, it’s a milestone that can have a big impact on deforestation. But for producers in developing countries, the EUDR may well be a stumbling block: they must make major changes in a short amount of time if they want to continue supplying the EU. This will bring about major structural changes in production and trade.

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"The EU has opened an important door for targeted trade rules"

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Elisabeth Bürgi Bonanomi: With the EUDR, the EU has introduced new trade rules that are essentially pointing in the right direction. It signals a paradigm shift. It means that goods produced in different ways will also be treated differently when imported – something that states so far have been very hesitant to do. But many questions remain with regard to implementation.

In a new CDE research project on coffee in Ethiopia, we’ve seen that farmers cannot easily provide the required information. The transition will take time and money. Value chains must be made more transparent and EUDR-compliant coffee must be explicitly sorted. It would be easier if the EU permitted territorial approaches in cases where many smallholders are affected.

Meaning?

Elisabeth Bürgi Bonanomi: It’s about permitting producer organizations to collect the required geodata on behalf of individual farmers, to ease the farmers’ burden – and about enabling entire landscapes to be identified as deforestation-free per se. There are signs that the EU is moving in this direction. But it remains problematic that the EUDR doesn’t regulate who should bear the added costs of traceability. It could have stipulated that the traceability services be procured mainly from the producer countries; this would create more value locally. 

The deadline for implementation will likely be extended by one year – not least due to pressure from producer countries and importers. Besides the short deadline, the main criticism is that the EU – as an import market – is taking a one-sided top-down approach to exert pressure on producers in the global South. 

Astrid Zabel: Even if 12 more months are granted for implementation, the deadline remains ambitious and the top-down approach is problematic. But the EUDR is also partly a frustrated EU reaction to the failure of its predecessor, the European Timber Trade Directive (EUTR). The EU is now trying to have more influence by expanding the law to products other than timber. This creates pressure, but also opportunities: Those who fulfil the requirements gain access to the European market, which is attractive. 

Why did the EUTR fail in practice?

Elisabeth Bürgi Bonanomi: The EU concluded so-called voluntary partnership agreements with various countries. These were only partially implemented. But the EUTR was actually more balanced in its design: While the EU demanded compliance with standards, in return it eased market access for compliant timber. In this way, they acknowledged that producers in the global South need profitable markets and should be able to sell environmentally friendly products internationally. This approach of easing market access was not adopted in the EUDR. 

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"In Ethiopia, we met many experts who also view the EUDR as an opportunity"

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I’d like to come back to criticism of the top-down approach. I think there are more nuances to it. The EUDR belongs to the EU’s Green Deal, which attempts to address the major environmental challenges we face. The EU sees itself as a constructive player that shares global responsibility for common concerns. With its new regulatory approach, it also hopes to inspire and influence other countries and the international arena in the areas of environmental protection and human rights, as well as advance the WTO’s sustainability agenda. Producer countries understand this to some degree. What they consider top-down is the EU not recognizing national forest laws and deciding on its own where forest boundaries should run.

Can you cite an example of the EUDR being greeted positively in the global South?

Elisabeth Bürgi Bonanomi: We met many experts in Ethiopia who see the EUDR not only as a challenge, but also as an opportunity. It will help draw attention to the fact that a large share of Ethiopian coffee comes from ecologically rich areas – from forests and agroforestry systems. They hope that such sustainably grown coffee will soon fetch better prices. Criticism is directed at the many open questions around implementation.

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"Producers realize that other export markets may eventually follow suit with similar rules"

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Astrid Zabel: I had a very similar experience when I analysed 24 hours of YouTube video material on reactions to the EUDR for a study. It revealed that while the EU is not the biggest export market for many countries, producers realize that other export markets like the USA, Japan, China and, in some cases, Switzerland may eventually follow suit with similar rules. So, many are saying: “It’s better to comply now in order to gain an advantage in the markets that will follow later.”

Elisabeth Bürgi Bonanomi: Ethiopia is an example of this. About 30 per cent of its coffee is currently exported to Europe. The country is working with stakeholders to establish traceable, formalized value chains.  In the short term, due to the strict EUDR requirements, it will probably export less coffee to Europe. So, the government is simultaneously trying to diversify its export markets beyond the EU and Switzerland. In general, there will be two different types of markets for producers in many countries: markets with more or less stringent requirements. This will give producers more bargaining power and, in the medium to long term, the chance to sell goods to the EU or Switzerland at a higher price.

There are also fears that the EUDR will lead to more plantation cultivation because it’s easier for plantation owners and large companies to meet the technological infrastructure requirements needed for traceability.

Astrid Zabel: I expect major scale effects. Large plantations will find it much easier to sell their goods. Consolidation will also probably occur in the area of intermediate trade. Today, many intermediaries profit from these raw materials – some operating in grey areas of business. Their number will likely decrease, which could have a positive price effect – but, of course, it will also impact the stakeholders who earn a living from intermediate trade.

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“Pressure could increase on ecosystems outside of forests”

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Does this mean that coffee sold in the European market will mainly come from plantations rather than eco-friendly small farms?

Elisabeth Bürgi Bonanomi: It’s not easy to predict. The EU is investing a lot of money to preserve valuable, small-scale structures in producer countries and bring them on board. It has also issued further rules – such as the new supply chain law known as CSDDD – to counteract such dynamics. According to these rules, large companies are obligated to prevent negative impacts on people and the environment.

Astrid Zabel: In addition to concerns about land grabbing and creation of new plantations under one large owner, there’s another fear: that areas affected by the EUDR will cease to be used for producing agricultural commodities, making room for other uses – such as cultivating illegal substances. Exactly what happens will greatly depend on local governance, price trends for various commodities, and other factors.

Elisabeth Bürgi Bonanomi: There could be other unintended effects and shifts – including increasing pressure on ecosystems outside of forests. Forests might be protected, but not surrounding habitats. Indeed, a reform of the EUDR to amend this is already under consideration.

A reform is being considered before the regulation has even been implemented?

Elisabeth Bürgi Bonanomi: It’s a process of finding the “best” regulation. It’s also likely that a WTO dispute settlement procedure will be initiated against the EU. This will most probably – and quite rightly – not result in the EUDR as a whole being called into question, but rather in the need to adapt it in a more context-sensitive way.

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"We demand more protection of forests, but we don’t change our own consumption patterns"

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The bigger context to the EUDR is that our consumption is driving global deforestation. And now the producers in the global South are supposed to fix it. Aren’t we shirking our own responsibility?

Elisabeth Bürgi Bonanomi: The EUDR also applies within the EU itself. It will be interesting to see how the EU implements the rules in its member states. And if the EUDR triggers higher prices, then consumption of the corresponding commodities will decline to some extent.

Astrid Zabel: There are EU research programmes – such as Horizon2020 – that take up sufficiency in consumption, but no corresponding rules have been established at a policy level. From this perspective, the EUDR shifts responsibility for the external impacts of our consumption elsewhere: We demand more protection of forests, but we’re reluctant to change our own consumption patterns – except in reaction to price changes.

In a new research project that I’m leading together with African partners, we’re exploring whether a green, wood-based economy could be established in Africa – instead of African producers diverting their trade flows to the Asian market in reaction to the EUDR. There are certain political efforts in this direction, but they’re still facing numerous trade barriers. The EUDR has given new urgency to the question of whether the African continent can do more with its own resources and build a better market for itself.

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"Many African countries have long held the dream of their own certificate"

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Does this mean a wood-based economy in which deforestation continues as before?

Astrid Zabel: No, it means an economy based on principles of sustainable forest management, in which trees can be used outside of protected areas. The idea – and a long-held dream of many African countries – is to create an intra-African certificate based on sustainable forest management. For producers in these countries, environmental certificates for wood like FSC and PEFC are hard to obtain: they’re very expensive and involve a lengthy process. So, we want to explore the possibility of creating a certificate for intra-African trade that’s easier to implement and achieve – despite criticism that certificates aren’t real solutions. We should also consider that this fulfils a need in these countries.

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“Commodity trading is not affected by the EUDR as long as the physical commodities don’t enter the EU”

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Swiss companies that wish to supply forest-based products to the EU are also affected by the EUDR. But the Swiss Federal Council hasn’t created its own EUDR-compliant regulation for deforestation-free supply chains so far...

Astrid Zabel: ... The Federal Council is waiting, but I don’t see any alternative to autonomous adoption of the regulation ...

Elisabeth Bürgi Bonanomi: ... Switzerland is analysing the EUDR and has not yet decided whether to enshrine the same rules in Swiss law. But I also think that Switzerland will need to follow suit. Swiss companies that want to export EUDR-related commodities or products to the EU will have to comply with the new requirements one way or the other. Of course, companies could take their own measures to ensure traceability of their goods. But this would lead to indirect discrimination against companies that don’t supply the EU market. Besides, Swiss companies would face a non-tariff trade barrier if Switzerland doesn’t introduce a monitoring system mirroring that of the EU.

And if Switzerland does nothing, will it become a hub for products derived from deforestation?

Elisabeth Bürgi Bonanomi: Here we have to distinguish between goods processed in Switzerland that physically cross the border into the EU, on the one hand, and commodity trading, on the other, where goods do not actually physically enter Switzerland or the EU. In the case of large companies that process coffee or cocoa, for example, it’s possible that they’ll create segregated value chains – one that’s EUDR-compliant for the European market, and one that isn’t guaranteed free of deforestation for other markets. But commodity trading won’t be affected by the EUDR as long as the goods don’t enter the EU. Here, we’ll have to see whether the new supply chain law, the CSDDD, is effective.

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"Switzerland should adopt the regulation wisely, in a way that includes support for indigenous and local communities"

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If Switzerland follows suit: Should it adopt the EUDR as quickly as possible or take the time to develop its own approach?

Astrid Zabel: It should replicate it to avoid creating different systems. But it should do so wisely and simultaneously invest in supporting indigenous and local communities – in a way that enables them to participate in markets and avoids undesirable structural shifts that create socio-economic disadvantages for the most vulnerable. New, creative approaches and solutions must be found to counter unintended effects.

Elisabeth Bürgi Bonanomi: Switzerland could make better use of its policy space. Besides providing technical support to small farmers, as the EU does, it could also introduce policy incentives to specifically support socially responsible business models. This would still be EU-compliant, but it would also help advance the debate. In a small project with the Wyss Academy for Nature, we are currently developing possible legal provisions to inspire this process.