The European Union (EU) Deforestation Regulation has been criticised over the increase in red tape it brings. As is known, the European Commission is reviewing the reporting requirements, which continue to worry the forest sector, since the signs suggest they will be extensive.
The Commission is preparing an IT-based review of the rules in order to make the reporting required under the Deforestation Regulation (EUDR) less burdensome. One of the outcomes of the review is expected to be a so-called interface, that is, a means of automating the transfer of data from the body commissioning the harvesting to the EU's TRACES system (Trade Control and Expert System). The Commission had previously required that so-called due diligence statements be entered into TRACES manually, rather than by digital data transfer. The new system should be up and running by the end of the year. Due Diligence statements are based on each operator's risk assessment, and they serve to ensure that the timber complies with EUDR requirements.
Forest.fi discussed the review of the regulation described above with Shingo Masuda (Shingo Masuda), a senior inspector at the Finnish Food Authority. The TRACES system is used both to monitor timber and wood products imported and sold in the EU and to monitor certain agricultural and food products.
Representatives of Finland's forest sector have already voiced concern that the regulation will create an extremely heavy workload, precisely in the submission of reports. Around 100,000 timber transactions take place in Finland each year.
“Forest sector companies need a functioning data transfer system,” says Maija Rantamaki, Head of International and EU Forest Affairs at the Finnish Forest Industries Federation.
“Some forestry companies are currently testing how the system works. The Commission has warned that changes are still possible. That creates problems for companies, because setting up and adapting their own internal systems will also take time,” Rantamaki stresses.
National legislation supplementing the EUDR is being drafted in Finland. The regulation covers livestock products, cocoa, coffee, palm oil, rubber, soy and timber. According to the Natural Resources Institute Finland (Natural Resources Institute Finland), the provisions relating to cattle farming and wood production are of particular importance to Finland.
The interface is useful for large companies
Under the EUDR, a report is required confirming that the harvesting of the timber being sold has not caused deforestation or forest degradation — for example, the conversion of forest land to agricultural use, or the conversion of “old forest” into commercial forest.
Where forests are concerned, responsibility for reporting lies mainly with the buyer, not with the individual seller of the timber. In Finland these are often private individuals with no forestry education or relevant qualifications. The same applies to transactions in which the buyer manages the harvesting itself.
The EUDR was published in June 2023 and will enter into force on 30 December 2024. For micro-enterprises and small businesses, the transition period will end on 29 June 2025.
On the data transfer systems currently being prepared, Masuda believes they will be more useful to large market operators than to private individuals selling timber. In his view, the Commission wants reporting to be handled by professionals.
“If, say, three hundred thousand [Finnish] forest owners had to register in the TRACES system and learn how to submit a due diligence statement, we would get literally thousands of calls asking for advice. That would make no sense at all. We want to avoid it by every means available,” Shingo Masuda stresses.
Representatives of Finland's forest sector consider the aim of the EUDR to be an important one, of course — to reduce the EU's contribution to deforestation and forest degradation worldwide. Maija Rantamaki notes that the implementation and roll-out of the EUDR within companies is being hampered by the fact that the European Commission's preparation of guidance on how to interpret the regulation has been delayed repeatedly.
“The lack of guidance creates a great deal of unnecessary work and drives up costs. For example, we still do not know what to do with timber that has already been harvested and with the products made from it, which can only be placed on the market once the regulation takes effect in January. Do we have to declare data on products made from such timber in January? And if so, how? At present the system is not set up to accept declarations on felled timber,” Maija Rantamaki stresses.
Not every wood chip or splinter has to be traceable
Shingo Masuda maintains that public debate has been dominated by a mistaken belief that every “piece of wood” must be traceable back to the forest compartment in which the tree concerned was felled.
“That is not true! A product you find in a shop will not have to be traced back to the felling site. So a shop selling office paper, for instance, does not need to know whether the wood the paper was made from came from one part of Finland or another,” Masuda explains
Once timber has been placed on the market for the first time and found to comply with EUDR requirements, it can be freely combined with products from the forest, sawmilling and wood-processing industries, regardless of whether they originate inside or outside the EU.
“Consignments of wood delivered to paper mills do not have to be stored separately in order to trace the origin of every raw material,” says Masuda. Maija Rantamaki, for her part, believes such a process could make sense, but that there would need to be clear and comprehensible guidance.
“Under the regulation, every operator has a duty to ensure that any product it supplies to the market is not linked to deforestation. If an operator uses only raw materials and products for which a due diligence statement has been submitted, the risk of deforestation is negligible, which means the operator ought to be able to fulfil its obligation without unnecessary bureaucracy,” Rantamaki notes.
Imported timber is checked more thoroughly
According to Shingo Masuda, the EUDR forms part of the EU's global forest policy, in which particular attention is paid to imports of timber and wood products from countries outside the EU. The supply chain must be documented from beginning to end.
“The EUDR was drawn up with biodiversity ‘hotspots' both north and south of the equator in mind. That is the most important area, but because of global trade agreements the European Union cannot apply the EUDR to territories outside the EU without imposing the same obligations on operators within the European Union.”
The EUDR requires timber importers to assess all risks of illegal activity.
“There is a possibility that, by falsifying origin data or documents, legal and illegal timber could be mixed together and then sold on. Those engaged in importing must have the skill to assess these risks,” Shingo Masuda explains.
Forestry in Finland does not cause deforestation
Finland's Forest Act requires felling sites to be regenerated. On average, four new trees are planted for every tree felled. More than half of the annual deforestation in Finland is linked to construction projects, and roughly one third to agriculture. The Natural Resources Institute Finland estimates that the European Union's Deforestation Regulation (EUDR) will have little effect on timber harvesting in Finland.
The EUDR is based on the European Union Timber Regulation. On the basis of impact assessments, that earlier regulation was not considered effective enough to prevent deforestation worldwide.
“The analysis showed that the rate of deforestation is high enough to wipe out all forests within two or three generations. The decline in biodiversity has reached alarming proportions, and the present generation has not taken sufficient responsibility for it,” Shingo Masuda notes.