The Managing Director of Sunbeth Global Concepts, Olasunkanmi Owoyemi, recently wrote an article about the European Union Deforestation-Free Regulation (EUDR) and its potential effects on commodity trade originating from Africa to Europe. The article which was published on THE NATION news covered the following key points.
Brief Background Into EUDR
The European Union Deforestation-Free Regulation was instituted to address the issue of biodiversity loss resulting from deforestation, and reduce greenhouse gas emissions in the EU. The initiative is part of the broader EU Green Deal which seeks to push Europe towards achieving net-zero emissions by 2050.
The EUDR was initiated on June 29, 2023, but its main prohibitions will take effect from December 30, 2024. Effective from that date, organizations that fail to comply with the regulation will face possible sanctions.
The EUDR is aimed at discouraging deforestation and other activities with harmful repercussions on the environment. As such, it’s purpose is to ensure all operators trading specific commodities such as cocoa or cocoa products within Europe can prove that their goods do not originate from recently deforested lands.
Log of Trunks on Recently Deforested Land
Primarily, the EUDR addresses the trade of seven commodities including cocoa, cattle, wood, Soya, palm oil, rubber, and coffee. It also affects their derived products such as chocolates, leather, tyres, or furnitures. Specifically, the regulations ensure the products meet the following criterias before being placed in the EU market.
- They’re deforestation free – they’re produced on land that’s not been subjected to deforestation after December 2021.
- They satisfy legality provisions – they were produced in accordance with laws applicable in their origin countries. In most cases, this includes lands use rights, and human and child labour considerations
- They’re covered by a due diligence statement – this requires that a statement should be produced indicating that due diligence was done to show that all background checks and verifications are done on the commodities. That ensures there are no risks that the producers failed to comply with the EU regulations.
The DD process will also consider the risk category of the country of production by the European commission.
How Does the EUDR Affect Africa?
The EUDR by its very nature affects several countries outside the EU that produce the commodities covered by the regulation
The regulation affects all operators trading their commodities in Europe. It doesn’t matter if such operators source their products or raw materials from other continents, they’ll also be subject to the regulation when trading their items in Europe.
Cocoa is Nigeria’s top non-oil export with Europe being the primary destination for most (around 70%) of Nigeria’s cocoa export. In addition, Cote D’Ivoire and Ghana, the top two cocoa producers globally are also African countries but a significant percentage of their products also end up in Europe.
It’s the responsibilty of the EU companies bringing the covered commodities into the EU market to conduct due diligence and upload the due diligence statement. However, non-EU companies will invariably be required to provide the necessary information to aid this compliance.
Thus, for non-EU businesses to sustain trade with their customers in the European market beyond 2024, they must proactively prepare for compliance with the regulation.
However, one potential downside of the regulation is it could impact the ability of EU companies to sell products that were already in production before the regulation was passed if the goods remain in the market beyond 2024.
Unfortunately, the approach might not necessarily eliminate deforestation in high-risk areas as the operators in these locations may simply divert to their exports to countries without such regulatory restrictions.
Implications of Implementing Regulation Without Due Consultation
According to the MD, the EU’s imposition of planting and sourcing regulations without sufficient input from origin producers reflects a form of economic colonialism. While the intent to address deforestation is commendable, the approach adopted raises questions about fairness and collaboration considering its highly punitive nature.
There should have been due consultations with value chain players prior to the introduction of the regulation. However, in its current form, the regulation disregards the efforts of value chain countries in the global south to painstakingly balance environmental consideration with people’s livelihoods.
In the MD’s opinion, the EU’s posture with the regulation is one that undermines the impact of producing regions on its economy. Europe currently benefits significantly from trade with African countries especially for commodities like cocoa. The EU stands to experience substantial losses should Africa decide to boycott trading relations with Europe for the EUDR affected products.
Africa Needs to Address Its Lack of Relevance
While concluding his article, the MD expressed the need for Africa to address the issue of its lack of relevance in the international cocoa industry. He stated that the raw materials sourced from Africa fuel the massive factories built by several multinationals in Europe and also pays for the salaries of millions of workers in the western world. As such, Africa should also institute policies to be adhered to in guiding the trade of its commodities. Doing such will help address the issue of the lack of relevance attached to Africa in the international cocoa industry.
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