EU Commission relented: Reporting required by Deforestation Regulation to be less onerous, though forest industry is still not happy

19.6.2024 / Article
Timber product in the Metsä Fibre's sawmill, Rauma, Finland
National legislation to complement the EUDR is currently being drafted in Finland. The regulation applies to cattle, cocoa, coffee, palm oil, rubber, soy and wood. Photo: Tero Pajukallio / Diaidea

The EU’s Deforestation Regulation has been criticized for causing red tape. The EU Commission is now revising the reporting obligation, which the forest sector fears would be massive.

The EU Commission is preparing an IT-based revision designed to make the reporting required by the Deforestation Regulation (EUDR) less cumbersome. The revision involves an interface to automate the transfer of data from the body commissioning a felling to the EU’s Traces system (Trade Control and Expert System).

The Commission previously required that what are called due diligence statements would be entered manually into the Traces system instead of via digital data transfer interfaces.

The new system should be up and running before end of year. The due diligence statements are based on each operator’s risk assessment, and ensure that the wood complies with the EUDR.

Forest.fi discussed the revision with Senior Inspector Shingo Masuda from the Finnish Food Authority. The electronic Traces system is used to control timber and timber products imported into and sold in the EU, as well as certain important agricultural products and foodstuffs.

The Finnish forest industries have expressed the concern that the regulation will cause an enormous need for reporting, since the annual number of timber deals alone is about 100,000.

A functioning interface for data transfer is a necessity for companies within the forest industry, says Maija Rantamäki, Manager of International and EU Forest Affairs at the Finnish Forest Industries Federation.

’Some forest companies are currently testing the interface and how it functions. The Commission has warned that modifications are still possible. This is problematic for the companies, because constructing in-house systems to work with the interface will also take time,’ Rantamäki points out.

Some forest companies are currently testing the interface and how it functions. The Commission has warned that modifications are still possible. This is problematic for the companies, because constructing in-house systems to work with the interface will also take time.

National legislation to complement the EUDR is currently being drafted in Finland. The regulation applies to cattle, cocoa, coffee, palm oil, rubber, soy and wood. According to Natural Resources Institute Finland, regulation concerning cattle farming and the production of wood is of particular importance to Finland.

Interface is useful for large companies

The EUDR requires a report showing that the felling of the wood on sale has not caused deforestation or degraded the forest, such as converting forest land to agriculture or ’old-growth forest’ into commercial forest.

As regards forests, the reporting is mainly the responsibility of the buyer, rather than of the individual seller of timber; in Finland, these are often private individuals with no training or education in forestry. This is the case with stumpage deals, where the harvesting is managed by the buyer.

Published in June 2023, the EUDR will come into effect on 30 December 2024. For micro and small enterprises, the transition period will end on 29 June 2025, except in the case of wood products.

As for the data transfer interfaces currently under preparation, Masuda considers that they will be more useful for large-scale operators than for individuals selling timber. According to Masuda, the Commission wants the reporting to be managed by professionals.

’If, say, three hundred thousand [Finnish] forest owners would have to register in Traces and learn to submit a due diligence statement, we’d be getting thousands of phone calls asking for advice. That would make no sense. We want to avoid that by all possible means,’ says Masuda.

The Finnish forest industries consider the purpose of the EUDR to be important: to minimize the EU’s effect on deforestation and forest degradation on a global scale.

The lack of instructions leads to a lot of unnecessary work and expenses. As an example, we still don’t know what to do about wood that is felled today and made into products that will be placed on the market only after the regulation has come into fore in January. Should we report the data on products made of such wood in January, and if yes, how? At the moment, the Commission system is not set to accept felling notifications.

Maija Rantamäki further points out that implementing the EUDR in companies is made more difficult because of repeated delays in getting the Commission’s instructions on how to interpret the regulation, among other things.

’The lack of instructions leads to a lot of unnecessary work and expenses. As an example, we still don’t know what to do about wood that is felled today and made into products that will be placed on the market only after the regulation has come into fore in January. Should we report the data on products made of such wood in January, and if yes, how? At the moment, the Commission system is not set to accept felling notifications,’ Rantamäki says.

Every single bit of wood need not be traceable

Masuda says there has been an erroneous understanding in public debate, according to which every single length of wood should be capable of being traced back to the forest compartment where it was felled.

’That is indeed not true. What you find in a shop will not need to be traced back to a felling site. So, for example, a shop selling office paper is not required to know whether the timber used to make the paper hailed from this or that locality in Finland,’ he says.

Once the wood has been placed on the market for the first time and found to comply with the EUDR, it may be freely combined with products of forest, sawmill, and wood product industries, whether originating in or outside the EU.

’The timber lots brought to paper mills need not be kept separate in order to trace the origin of the raw material of every batch of paper,’ Masuda explains.

According to the regulation, every operator is obliged to ensure that any product they bring to the market is deforestation-free. If an operator only uses raw materials and products for which a due diligence statement has been submitted, the risk of deforestation is negligible, which means that they should be able to meet their obligation with less bureaucracy.

Rantamäki considers that this might make sense, but there should be clear instructions about it.

’According to the regulation, every operator is obliged to ensure that any product they bring to the market is deforestation-free. If an operator only uses raw materials and products for which a due diligence statement has been submitted, the risk of deforestation is negligible, which means that they should be able to meet their obligation with less bureaucracy,’ she says.

Imported wood is examined more closely

According to Shingo Masuda, the EUDR is part of the EU’s global forest policy. The particular focus is the importing of wood and wood products from outside the EU. The procurement chain must be documented from start to finish.

’The EUDR was written with the hot spots of biodiversity in mind, both north and south of the Equator. That is the most important area, but because of world trade agreements, the EU cannot impose the EUDR on areas outside the EU without imposing the same obligations on operators within the EU.’

The EUDR requires importers of timber to assess all risks of illegal activity.

’It’s possible to falsify the origin or the documents, to mix legal and illegal wood material and then sell it onwards. Those active in imports must have the skills to assess these risks,’ Masuda lists.

In Finland, forestry does not cause deforestation: the Forest Act requires the felling sites to be regenerated. On average, four new trees are planted for each tree felled. Over half of the annual deforestation in Finland is linked to construction projects, and about one third to agriculture. Natural Resources Institute Finland estimates that the EUDR will have little impact on deforestation in Finland.

The analysis showed that the rate of deforestation is enough to destroy all forests within two or three generations. The loss of biodiversity has reached alarming proportions, and the present generation is not taking sufficient responsibility.

The background to the EUDR lies in the EU Timber Regulation. On the basis of impact assessments, this earlier regulation was not considered to be sufficiently effective for preventing deforestation globally.

’The analysis showed that the rate of deforestation is enough to destroy all forests within two or three generations. The loss of biodiversity has reached alarming proportions, and the present generation is not taking sufficient responsibility,’ Masuda says.

Read more: IUFRO Executive Director: ’EU Commission shows lack of informedness on forest matters’

Read more: Former MEP, Minister Sari Essayah to the EU: ’Forest issues should not be approached ”through the back door”’

Tero Karjalainen | English translation: Heli Mäntyranta

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