The European Commission has finally adopted the proposed regulation introducing due diligence to stop imports of foodstuffs that come from territories subject to deforestation and/or forest degradation. (1)
The initiative responds to Parliament’s resolution 20.10.20 and envisions reforming reg. EC 955/10 at the time introduced-with unsatisfactory results-to promote the environmental sustainability of wood (2,3).
This begins to outline the content of that Sustainable food system framework initiative that could result in a framework-regulation. (4) With one blemish, the proposed sweep on deforestation prior to 31.12.20. ABC to follow.
1) DEFORESTATION AND FOREST DEGRADATION
1.1) Ecocide without respite
Deforestation continues at an unrelenting pace, much to the chagrin of non-binding commitments made by many states and self-referential certifications (
greenwashing
) of corporations that process agricultural commodities in LMIC(Low and Middle Income Countries).
TheFood and Agriculture Organization (FAO) estimates that 420 million hectares of forests will be destroyed between 1990 and 2020. An area larger than the entire EU territory, which corresponds to about 10% of the total forests on the planet that have survived deforestation. (5)
1.2) Deforestation, forest, degradation. Definitions
The following definitions are introduced in the proposed regulation for effect:
– deforestation. ‘The conversion of forest to agricultural use, human-induced or not‘,
– forest. ‘Land extending more than 0.5 hectares with trees taller than 5 meters and a vegetation cover of more than 10 percent, or trees capable of reaching these thresholds in situ, excluding agricultural plantations and land predominantly in agricultural or urban use.’
– Forest degradation. ‘Harvesting operations that are not sustainable and cause a reduction or loss of biological or economic productivity and complexity of forest ecosystems, resulting in a long-term reduction in the overall supply of benefits from the forest, which includes timber, biodiversity, and other products or services‘ (Article 2.1, points 1,2,6).
1.3) Palm oil, soybean, cocoa, coffee and meat
According to FAO, 90 percent of deforestation is associated with agricultural monocultures and the extensive livestock grazing that often precedes them (6,7). In the past two decades, deforestation has taken place predominantly in tropical areas. Its causes are attributed to the productions of palm oil (34 percent), soybean (33 percent), wood (9 percent), cocoa (8 percent), coffee (7 percent) and beef (5 percent). (8) And the European Union, between 1990 and 2008, consumed one-third of the globally traded agricultural products that resulted from deforestation.
The contribution to global deforestation, through imports and consumption of the commodities in question, is estimated to be at least 10 percent of total deforestation (see proposal, recital 14). The impact assessment of this initiative considers that, in the absence of due diligence, EU consumption of the six commodities included in the scope (wood, cattle, soybean, palm oil, cocoa and coffee) will cause deforestation of about 248 thousand hectares/year, by 2030.
1.4) Illegal deforestation, amnesty wiped out in Brussels
Illegal deforestation-according to data collected in the latest Forest Trends report (2021), confirmed in the recitals of this proposal-has reached 70 percent of the total in recent years (up 28 percent from the previous decade. See footnote 7). The voracity of palmocrats, fazendeiros and ruralistas has surpassed the necropolitics of Jair Bolsonaro, who had already granted the exploitation of 75 percent of the forests. (9)
However, the European Commission is proposing a ‘cut-off date,’ i.e., an amnesty on ecocides committed up to Dec. 31.20 (proposal, Art. 2.8.a). Assuming to define as ‘deforestation-free‘ all foodstuffs that come from land that has not been deforested at a later date. An ideological fallacy in the service of Cargill, Bunge, Unilever and all the other Corporations that have so far financed ecocides.
2) DUE DILIGENCE AND DEFORESTATION, THE OUTLINE OF EU REGULATION
2.1) Objectives
Stopping imports of agricultural commodities into the EU from areas prone to deforestation and forest degradation can enable:
– Reduce greenhouse gas emissions into the atmosphere, by at least 31.9 mln t/year of CO2 equivalent. Deforestation activities alone now express 11% of atmospheric emissions (IPCC, 2019), (10)
– Mitigate biodiversity loss, which is essential for the resilience of ecosystems and ecosystem services at regional and planetary levels. More than half of the global GDP depends on nature and the services it provides (proposed regulation, Art. 1).
2.2) Scope of application
The regulation will define the criteria for the placing and making available on the internal market, as well as the export from the EU to third countries of‘cattle, cocoa, coffee, oil palm, soybean, wood, and products containing, having been fed with, or manufactured from the same‘ (Art. 1, All. I).
A critical issue is seen in the exclusion from the scope of application of commodities subject to inward processingprocedures, i.e., temporary import for the purpose of processing and re-export to third countries, without release for freecirculation. See Article 2.1.26). (11)
2.3) Criteria
The goods and products in question can only be released for free circulation in the EU and/or exported from the EU if the three conditions of:
(a) be free ofdeforestation (deforestation-free, see supra, Sec. 1.3),
(b) have been produced in accordance with the legislation of the country of production,
(c) are covered by adue diligence statement(due diligence. Art. 3).
2.4) Due diligence statement
Operators and importers in the EU exercise due diligence-before placing the goods and products in question on the EU market or before their export from the EU-to ensure their compliance with the above criteria. The declaration may be delegated to an authorized representative, without prejudice to the operators’ responsibility (Art. 5,7).
The due diligence statement must:
– be made available in advance to the competent authorities designated by the member states-via the information system (Registry) interconnected with Customs through the EU Single Window Environment for Customs (see Art. 31),
– confirm that due diligence has been exercised and no or only ‘negligible risk‘ has been found, (12) reporting the information in Annex II,
– be followed by immediate notification to the competent authorities of the countries of destination (EU and non-EU), if operators have received new information, including well-founded suspicions, about the possible non-compliance with the criteria of goods already placed on the market or exported (Art. 4).
2.5) SMEs, reinforced traceability
Traders-defined as wholesale and retail (processing and) distribution companies-that qualify as SMEs (13) are exempt from the due diligence declaration if they merely make goods available on the EU market (without import-export activities).
Even SMEs must still register and retain information about their suppliers and customers other than end consumers (name or company name or registered trademark, mailing address and email, website if available) for 5 years.
The duty to immediately notify the competent authorities of any subsequent information or well-founded suspicion of non-compliance with the criteria set out in the regulation remains in place (Art. 6).
3) DUE DILIGENCE, THE ABC
The due diligence outlined in this proposed regulation consists of three parts. Commodity information, risk analysis of deforestation and forest degradation, mitigation of such risks (Art. 8).
3.1) Commodity information
The information that operators must collect, keep for 5 years and make available to competent authorities upon request, as a prerequisite to due diligence, covers:
(a) description, including the trade name and type of goods and products as well as, ‘where applicable‘ [to be specified, ed.], the common name of the species and its full scientific name,
(b) the quantity (mass and volume, or number of units) of the goods and products in question,
(c) identification of the country of production,
(d) geo-location coordinates, latitude and longitude of all plots of land where the goods and products in question were produced, and date or time interval of production,
(e) name, email and address of any company or person from whom the goods or products in question were supplied,
(f) name, email and address of any company or person to whom the goods or products in question were supplied,
(g) adequate and verifiable information that the goods and products in question are deforestation-free,
(h) adequate and verifiable information that production has been conducted in accordance with the relevant legislation of the country of production, including any agreement conferring the right to use the area in question for the purpose of producing the product in question (Article 9).
3.2) Risk analysis of deforestation and forest degradation.
The risk analysis takes into account the following evaluation criteria:
(a) risk attributed to the country or areas of the country of origin of the goods (formerly Art. 27). If all commodities are sourced from countries defined as low-risk, the items below do not require risk analysis and simplified due diligence (ex Art. 12) is applied,
(b) presence of forests in the country and production area,
(c) prevalence of deforestation or forest degradation in the country, the region the area of production,
(d) sources, reliability, validity of data, and consistency with information collected under Article 9 above (see supra, Section 3.1),
(e) concerns about the country of production and origin. Ex. level of corruption, prevalence of falsification of data and documents, lack of law enforcement, the armed conflicts, sanctions imposed by the UN Security Council or the EU Council,
(f) supply chain complexity, difficulty in linking goods and/or products to the land parcels from which they originate,
(g) the risk of mixing with products of unknown origin or produced in areas where deforestation or forest degradation has occurred or is taking place,
(h) conclusions of the Commission’s panel meetings published in the appropriate register,
(i) substantiated concerns submitted by individuals and organizations to the authorities (see Art. 29),
(j) additional information, including information collected under certifications or other third-party verified systems (Article 10.2).
3.3) Risk mitigation
If the above analysis does not allow the operator to declare no or negligible risk of non-compliance of goods with the criteria of the regulation,
‘the operator shall, before the goods and products in question are placed on the Union market or exported, adopt appropriate risk reduction procedures and measures to achieve zero or negligible risk‘ (Art. 10.4).
Mitigation is achieved through effective procedures and controls that are proportionate to the contexts to be documented, reviewed at least on an annual basis, and made available to the relevant authorities upon their request. In order to ‘Effectively mitigate and manage the risks of nonconformity of relevant goods and products identified. These include:
(a) model risk management, reporting, record-keeping, internal control and compliance management practices, including, for non-SME operators, the appointment of a senior-level compliance officer,
(b) an independent audit function to verify the internal policies, controls, and procedures referred to in par. (a) for all operators who are not SMEs’ (Art. 10, para. 4-7).
4) OFFICIAL CONTROLS
It is the responsibility of member states to plan official controls on the basis of risk analysis, in each case subjecting at least 5 percent of operators and 5 percent of goods covered by this framework to verification. Enhanced controls are then provided in cases of high-risk commodities arriving from high-risk countries and/or their areas (Art. 20).
An annual report on the implementation of the regulation-with accounts of the controls performed in the previous year and scheduling of those for the year s to follow-must be published by member states and made available to all stakeholders by April 30 each year. The Commission will in turn publish a comprehensive annual report (Art. 19).
4.1) Cooperation in controls in EU.
The competent authorities in the different member states will have to interact, including with the European Commission, through the information system (the Article 31 Registry). Reporting, among other things, any high risk of non-compliance with the criteria set out in the regulation under review, including with a view to the adoption of interim measures under Art. 14.6 (see section 4.2 below).
Not mentioned, although appropriate and perhaps indeed necessary, is the integration of these controls into the systems provided by:
– reg. EU 2017/625, with regard to all agri-food commodities. (14) Although it refers to environmental sustainability as a requirement for food safety and animal welfare and the pending General Product Safety Regulation,
– General Product Safety Regulation.
, the proposal for which was adopted by the European Commission on 30.6.21, where as well, reference is made to environmental sustainability and the precautionary principle (as well as the Safety Gate information system), with regard to timber. (15)
4.2) Interim measures and market surveillance
Should the controls public detect serious deficiencies-as well as in cases where high risks of noncompliance are detected (Article 14.6)-competent authorities may take immediate interim measures that include ‘the seizure or suspension of the placing or making available on the Union market and the export from it of the goods and products in question‘ (art. 21, interim measures).
Market surveillance involves, in the event of established failure to comply with due diligence duties, the authorities’ request to operators and traders to take without delay ‘appropriate and proportionate corrective measures to end the non-compliance.’ That is, ‘at least one or more of the following actions:
(a) rectify any formal non-compliance, particularly the requirements of Chapter 2 of these regulations
(b) prevent the commodity or product in question from being released, made available or exported from the Union market,
(c) immediately withdraw or recall the goods or product in question,
(d) destroy the goods or product in question or donate it to charitable purposes or public interest.’ (Art. 22, market surveillance). (17)
5) SANCTIONS
Member states will define procedures and penalties to be applied to operators and traders in case of violations of the rules under consideration, taking ‘all necessary measures to ensure their implementation. Sanctions should be ‘effective, proportionate and dissuasive‘ and include, ‘at aminimum:
(a) fines commensurate with the environmental damage and the value of the goods or products concerned, calculating the level of such fines in such a way as to ensure that they effectively deprive those responsible of the economic benefits derived from their violations, and gradually increasing the level of such fines for repeated violations; the maximum amount of such fines shall be at least 4 percent of the annual turnover of the operators or traders in the member state or states concerned,
(b) the confiscation of the goods and products in question from the operator and/or trader,
(c) confiscation of the proceeds obtained by the operator and/or trader from a transaction with the goods and products in question,
(d) temporary exclusion from public procurement procedures‘ (Art. 23, penalties).
6) CUSTOMS PROCEDURES
Customs procedures established for the release for free circulation in the Union and the export from the EU to third countries of foodstuffs and products covered by the regulations under consideration entail the burden of the custom authorities to perform controls based ‘mainly on risk analysis, with the aim of identifying and assessing risks and developing necessary countermeasures, and are carried out under a common EU-wide risk management framework‘ (art. 24).
The reference number of the declaration of due diligence assigned by the information system (the Registry referred to in Article 31) ‘in relation to a commodity or product in question entering or leaving the Union shall be made available to the customs authorities at the time the customs declaration for release for free circulation or export is lodged‘. In cases where there is a need for further verification or non-compliance, a procedure for suspension of the customs file is activated.
7) BENCHMARKING AND COOPERATION WITH THIRD COUNTRIES
A benchmarking system operated by the Commission will identify countries as low, standard or high risk of producing goods or products that are not free of deforestation and forest degradation. The occasion will also be worthwhile to propose cooperation agreements with third countries aimed at introducing environmental sustainability as a necessary paradigm to support strategic business partnerships.
7.1) Benchmarking
II benchmarking involves Brussels interaction with third countries and subsequent publication of a list of their respective risk levels. The evaluation criteria should in any case consider:
(a) Deforestation rate and forest degradation,
(b) rate of expansion of agricultural land for the production of oil palm, soybean, cocoa, coffee, beef,
(c) production trends of the above commodities and related products,
(d) effective consideration in nationally determined contributions (NDCs) to the UN Framework Convention on Climate Change of emissions related to agriculture, forest management and land use,
(e) agreements with the EU related to monitoring and mitigation of deforestation and forest degradation,
(f) effectiveness of national and/or local regulations, controls and deterrent sanctions to ensure protection of ecosystems against the said phenomena (Art. 27).
7.2) Cooperation with third countries
Deforestation and forest degradation will also need to be addressed through partnership and cooperation agreements with affected producer countries. With the objectives of promoting the conservation, sustainable use and restoration of forests through the transition to sustainable methods of commodity production, consumption, processing and trade.
‘Partnerships and cooperation should allow for the full participation of all stakeholders, including civil society, indigenous peoples, local communities, and the private sector, including SMEs and smallholders’ (Art. 28).
Cooperation should consider among other things ‘Tax incentives and other relevant instruments‘, i ‘gains for the landscape, property security, agricultural productivity and competitiveness, transparent supply chains, strengthening the rights of communities (…), indigenous peoples and local communities, and ensuring public access to forest management documents and other relevant information’ (18,19).
8) REPORTING AND ACCESS TO JUSTICE
Natural or legal persons may submit ‘substantiated concernsto the competent authoritiesif they believe, based on objective circumstances, that one or more traders or traders are not complying with the provisions of this Regulation‘. And if appropriate, take legal action.
8.1) Justified concerns
As a result of the complaints, the relevant authorities:
– ‘diligently and impartially assess substantiated concerns and take necessary measures, including audits and hearings of operators and traders‘, to verify potential violations of the rules under consideration, and where appropriate
– take interim measures to prevent the goods under investigation from being made available on the EU market and exported.
– as soon as possible, inform the exponents about the decision to grant or deny the request for action and provide the reasons (Art. 29, substantiated concern).
8.2) Access to justice
‘Any natural or legalperson with asufficient interest, including those who have filed a reasoned concern’ above, ‘shall have access to a court or other independent and impartial public body competent to review the procedural and substantive legality‘ of decisions, acts or omissions of the competent authority. Subject to the application of national rules providing for the exhaustion of administrative procedures before recourse to the judiciary.
9) TENTATIVE CONCLUSIONS
The draft legislation under consideration is disruptive in affirming the responsibility of both operators with a key role in bringing agricultural commodities from deforestation to the EU market and all downstream operators who fall under the very broad definition of traders:
‘natural or legal person in the supply chain, other than the operator, who in the course of a business activity makes the raw materials and products concerned available on the Union market‘.
9.1) Prospects and areas for improvement
The prospect of affirming due diligence in terms of integrated supply chain responsibility, throughout the supply chain established in the EU, is consistent with legislation already adopted in some EU countries (e.g., France. See footnote 20). And it should be extended to all supply chains that can cause deforestation, including, for example, rubber, corn and sugarcane.
In addition to the critical issues mentioned above – amnesty on deforestation carried out before 31.12.20 (see par. 1,4), exclusion of free zone processing for re-export purposes (see par. 2.2), failure to link with existing EU control systems (see par. 4.1) – two shortcomings are noted that could be addressed in the political consideration phase of the proposal.
9.2) Gaps to be filled
Deforestation, biodiversity loss and climate change are closely linked to irresponsible land management practices. (21) Which are also associated, especially in tropical areas, with land robbery (so-called land grabbing). As highlighted in the IPCC report Climate Change & Land (2019. See footnote 22) and the third Land Matrix report (2021).(23) This regulation should therefore extend responsibilities to basic human rights and labor rights, as already proposed in the European Parliament’s due diligence initiative. (24)
Financial organizations and public investors (ex.
World Bank
) and private investors, including pension funds that support companies involved in deforestation and land-grabbing with investments, loans or other services must come under identical responsibilities. Taking into account that private institutions alone realized net revenues of € 401 mln in the EU (in addition to € 177 mln in the UK), between 2016 and 2020, on operations of this type (with a total value of US$ 51.3 billion. Global Witness, 2021). (25)
#SDG2(Zero Hunger), #SDG3(Good Health and Well-being), #SDG12(Sustainable Consumption and Production), #SDG13(Climate Action), #SDG15(Life on Land). (26)
Dario Dongo
Notes
(1) European Commission. Proposal for a Regulation on the making available on the Union market as well as export from the Union of certain commodities and products associated with deforestation and forest degradation and repealing Regulation (EU) No 995/2010. COM(2021) 706 final. EN: https://bit.ly/3HKAhVi. EN: https://bit.ly/3pNlFOD
(2) Dario Dongo, Susanna Cavallina. Unsustainable deforestation and commodity imports. Public consultation on the EU strategy. GIFT (Great Italian Food Trade). 4.4.21, https://www.greatitalianfoodtrade.it/progresso/deforestazioni-e-import-di-commodities-insostenibili-consultazione-pubblica-sulla-strategia-ue
(3) Dario Dongo. Deforestation Made in Italy, Buycott! GIFT(Great Italian Food Trade). 10/23/19, https://www.greatitalianfoodtrade.it/consum-attori/deforestazione-made-in-italy-buycott
(4) Giulia Torre. European food policy, the way forward. GIFT(Great Italian Food Trade). 12/13/21, https://www.greatitalianfoodtrade.it/progresso/food-policy-europea-la-via-da-seguire
(5) FAO (2020). Global Forest Resource Assessment 2020: Main report. Rome. https://doi.org/10.4060/ca9825en
(6) FAO Remote Sensing Survey reveals tropical rainforests under pressure as agricultural expansion drives global deforestation . 6.11.21, https://www.fao.org/3/cb7449en/cb7449en.pdf
(7) Cassie Dummet, Arthur Blundell (2021). Forest policy trade and finance in agriculture, report. Illicit harvest, complicit goods: the state of illegal deforestation for agriculture. Forest Trends. https://www.forest-trends.org/wp-content/uploads/2021/05/Illicit-Harvest-Complicit-Goods_rev.pdf
(8) Florence Pendrill, U. Martin Persson, Javier Godar, Thomas Kastner, Daniel Moran, Sarah Schmidt, Richard Wood (2019). Agricultural and forestry trade drives large share of tropical deforestation emissions. Global Environmental Change, Volume 56, 2019, Pages 1-10, ISSN 0959-3780. https://doi.org/10.1016/j.gloenvcha.2019.03.002
(9) Dario Dongo. Brazil, deforestation is compounded by pesticide carnage. Unsustainable EU-Mercosur agreement. GIFT (Great Italian Food Trade). 4/21/21, https://www.greatitalianfoodtrade.it/mercati/brasile-alle-deforestazioni-si-aggiunge-l-ecatombe-da-pesticidi-insostenibile-accordo-ue-mercosur
(10) IPCC (2019). Climate Change and Land, an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems. https://www.ipcc.ch/srccl/
(11) Cf. reg. EU 952/2013(Single Customs Code), Articles 211-225 and 256-258
(12) ‘Negligible risk‘ involves the full assessment of both product-specific and general information on compliance with the criteria (ex Art. 3(a) and (b)), in relation to relevant goods and products ‘showing no cause for concern‘ (Art. 2.1.16)
(13) SMEs are enterprises with net revenues <40 mln €, balance sheet <20 mln €, <25 employees, on average, in the fiscal year. See footnote 12 See dir. 2013/34/EU as amended, Article 3. Text updated as of 12/31/21 on Europa Lex, https://bit.ly/3IJkXcJ
(14) Dario Dongo, Giulia Torre. Official public controls, EU Regulation 2017/625 kicks off. GIFT(Great Italian Food Trade). 12/18/19, https://www.greatitalianfoodtrade.it/sicurezza/controlli-pubblici-ufficiali-al-via-il-regolamento-ue-2017-625
(15) Dario Dongo. General product safety, proposed EU regulation. ABC. GIFT (Great Italian Food Trade). 14.8.21, https://www.greatitalianfoodtrade.it/sicurezza/sicurezza-generale-dei-prodotti-proposta-di-regolamento-ue-l-abc
(16) If the operator or the trader does not take the indicated corrective measures or otherwise the non-compliance persists, ‘competent authorities shall ensure that the product is withdrawn or recalled or that its making available on or export from the Union market is prohibited or restricted‘ (Art. 22.3)
(17) The Commission will have to notify third countries of its intention to classify the deforestation risk (as low, medium, high) and the resulting consequences. Allowing them an appropriate period of time to respond and, if appropriate, communicate the measures taken in the interim (Art. 27.3)
(18) The Commission should work to mitigate deforestation and forest degradation in bilateral and multilateral contexts, with express reference to Convention on Biological Diversity, FAO, UN Convention to Combat Desertification, UN Environment Assembly, UN Forum on Forests, United Nations Framework Convention on Climate Change, WTO, G7 and G20 (art. 28.4)
(19) The Committee on Food Security (CFS) at FAO adopted The Voluntary Guidelines on the Tenure of Land Fisheries and Forests (2012) and Principles for Responsible Investment in Agriculture and Food Systems (2014). However, the non-binding nature of the commitments made by the participating states has unfortunately prevented their concrete implementation. V. Dario Dongo. FAO, China in the lead. GIFT(Great Italian Food Trade). 6/27/19, https://www.greatitalianfoodtrade.it/progresso/fao-la-cina-al-comando
(20) Dario Dongo, Elena Bosani. Brazilian meat from deforestation, Groupe Casino sued in France. GIFT (Great Italian Food Trade). 7/18/21, https://www.greatitalianfoodtrade.it/progresso/carne-brasiliana-da-deforestazioni-groupe-casino-citata-in-giudizio-in-francia
(21) Dario Dongo. Biodiversity and climate emergency, the common thread. Égalité. 13.2.20, https://www.egalite.org/biodiversita-ed-emergenza-climatica-il-filo-comune/
(22) Dario Dongo. Land grabbing and climate change, the 2019 IPCC report. Égalité. 14.8.19, https://www.egalite.org/land-grabbing-e-cambiamento-climatico-il-rapporto-ipcc/
(23) Dario Dongo, Elena Bosani. Land robbery, palm oil tops the list. Due diligence risks, ESG. GIFT (Great Italian Food Trade). 11/21/21, https://www.greatitalianfoodtrade.it/idee/rapine-delle-terre-olio-di-palma-in-cima-alla-lista-i-rischi-due-diligence-esg
(24) Dario Dongo. Due diligence, the EU draft directive on socio-environmental responsibilities in the value chain. GIFT(Great Italian Food Trade). 7/27/21, https://www.greatitalianfoodtrade.it/progresso/due-diligence-il-progetto-di-direttiva-ue-sulle-responsabilità-socio-ambientali-nella-catena-del-valore
(25) Global Witness (2021). Deforestation Dividends. How global banks profit from rainforest destruction and human rights abuses. https://www.globalwitness.org/en/campaigns/forests/deforestation-dividends/
(26) Indicator 15.2.1(By 2020, promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests and substantially increase afforestation and reforestation globally), in UN Agenda 2039, has meanwhile failed
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
