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<\/p>\nInternational packaging organizations and political actors are calling for an overhaul of the EU Deforestation-Free Products Regulation (EUDR) deadline to ensure sufficient time to implement a working law. With the legislation impacting the US, stateside paper manufacturers are increasingly worried about meeting the adoption target date.<\/p>\n
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The EU issued the EUDR in 2023. The law is part of the Green Deal and aims to curb deforestation and forest degradation that could be linked to the import or export of certain commodities in the EU.<\/p>\n
The American Forest & Paper Association (AF&PA) asserts that the US pulp and paper industry \u201cis not linked to global deforestation and forest degradation.\u201d The AF&PA supports what the EU aims to achieve with the law but believes that the current EUDR imposes some \u201cunachievable\u201d requirements that create technical barriers that risk trade between the EU and the US.<\/p>\n
The sectors most affected by the regulation in the US, the EU\u2019s second-largest import partner, are the timber, paper and pulp industries. The EU imported approximately US$3.5 billion in US forest-based products in 2022, according to data by the US International Trade Commission.<\/p>\n
\u201cWhat\u2019s concerning for our industry is how EUDR will be implemented, especially EUDR\u2019s strict geolocation traceability requirements. This requirement could pose technical trade barriers for US companies based on our complex supply chain and fiber flow process.\u201d<\/p>\n
US timber merchants are considering cutting EU export contracts because they cannot prove their paper does not come from deforested land. The Confederation of European Paper Industries (CEPI) agrees and says that the EUDR in its current form does not work.<\/p>\n
\u201cThe EUDR is too important not to get it right. We certainly do not ignore the environmental crisis and the climate emergency, which the EUDR is designed to help solve \u2014 nor is our industry a source of deforestation,\u201d Jori Ringman, Cepi\u2019s director general, tells Packaging Insights<\/em><\/strong>.<\/p>\n \u201cFrom a business angle, deforestation is a major reputational risk for any industry \u2014 our industry also depends on healthy forests for our own future. We fully support the objectives of the EUDR.\u201d<\/p>\n Why US producers cannot comply <\/strong> The key concern in the US is coming from the pulp and paper sector rather than other industries, says the White House.<\/p>\n \u201cWe urge the European Commission (EC) to delay the implementation of this regulation and subsequent enforcement of penalties until these substantial challenges have been addressed,\u201d said Gina Raimondo and Thomas Vilsack, the US secretaries of commerce and agriculture, in a letter to the EC seen by The Financial Times<\/em>.<\/p>\n US timber merchants have said they are considering cutting EU export contracts because they cannot prove their paper does not come from deforested land.<\/p>\n The sector\u2019s counterparts in Europe have been raising the same issues, with particular concern coming from Germany, Austria and Poland.<\/p>\n Before the US call, the European Commissioner for Agriculture and Rural Development, Janusz Wojciechowski, had sent a letter to the Commission\u2019s President, Ursula von der Leyen, to support the call for a delay of the EUDR\u2019s implementation.<\/p>\n System goes out the window?<\/strong> \u201cIf overseas suppliers redirect their exports away from the EU, European producers could benefit by substituting imports with domestic production. However, this assumes that all European producers can comply with the EUDR and maintain their exports. It also assumes a minimal loss of global competitiveness. In this scenario, operating rates could increase by up to six percentage points from our current forecast,\u201d he says.<\/p>\n \u201cThe decrease in competitiveness, along with the potential failure to comply with EUDR regulations, could affect European exports and create opportunities for producers in other regions, like Asia, to gain a larger share of the European market overseas.\u201d<\/p>\n As a result, the EUDR could lead to an unintended increase in the use of high-deforestation-risk pulp and paper outside Europe.<\/p>\n \u201cThe only disappointing part of these actions and analyses now is that it has taken so long for the industry to understand the EC\u2019s game. The EUDR is the EU Timber Regulation (EUTR) on steroids,\u201d says Lopez.<\/p>\n \u201cComplying with EUTR (EU Timber Regulation) was relatively simple for most timber, pulp and paper producers. Most had voluntary systems in place to prove legality and sustainability \u2014 and by extension a very small risk of deforestation.\u201d<\/p>\n \u201cThe EUDR throws those existing systems out of the window and makes them irrelevant. It replaces them with requirements that even the most careful of forest managers would have difficulty complying with,\u201d he adds.<\/p>\n Complex chains<\/strong> In the US, more than half of forest land is owned and managed by an estimated 10.6 million private forest owners. These private forests provide about 90% of the wood to make forest products.<\/p>\n The US timber industry uses multiple wood inputs:<\/p>\n AF&PA says that its use of leftover materials and forest residues is one way of advancing circularity.<\/p>\n \u201cThe wood inputs used to make a single batch of pulp at a mill can come from multiple sources. This is called a \u2018fiber flow\u2019 \u2014 wood and wood chips mix throughout the supply chain, including the initial storage of a log or leftover material; the chipping process at a saw, chip or pulp and paper mill; the chip pile at a pulp and paper mill; the pulping process and the paper machine.\u201d<\/p>\n Leftover materials from sawmills and forest residues are blended multiple times, rendering material tracing impossible. The leftover materials from sawmills and forest residues our industry uses are regularly blended multiple times throughout the production process, making the tracing of each individual wood chip from the original forest plot of land to a final product impossible.<\/p>\n Additionally, AF&PA flags that the technology needed to trace the fiber flow to comply with this requirement does not currently exist.<\/p>\n Deforestation and wood compliance <\/strong> Forest degradation under the regulation consists of transforming certain types of forests into other kinds of forests or other wooded land. Different levels of wood harvesting are allowed, provided that this does not result in a transformation falling under the definition of degradation.<\/p>\n More specifically, deforestation under the regulation is defined as the conversion of forest to agricultural use. Conversion for other uses such as urban development or infrastructure does not fall under the deforestation definition.<\/p>\n As a major economy and consumer of commodities such as wood, rubber and foods including cocoa, soy, beef and palm oil, the EU is contributing to deforestation and forest degradation worldwide. The EC says that the EU therefore has the responsibility to contribute to ending deforestation.<\/p>\n By promoting the production and consumption of \u201cdeforestation-free\u201d commodities and products and reducing the EU\u2019s impact on global deforestation and forest degradation, the regulation is expected to bring down EU-driven GHG emissions and biodiversity loss.<\/p>\n To meet the regulation\u2019s requirements, wood needs to comply with two criteria: It needs to have been harvested from land not subject to deforestation after December 31, 2020 and it needs to be harvested without inducing forest degradation after December, 31 2020. (*)<\/p>\n
\nMeanwhile, the Biden administration has sent a letter to the EU urging it to delay EUDR.<\/p>\n
\nUnless manufacturers are vertically integrated (or their suppliers have a high level of integration), buying bulk commodities on the open market \u2014 \u201cmarket pulp\u201d \u2014 causes problems, Alejandro Mata Lopez, the director for European Packaging and Graphic Paper at cross-commodity price reporting agency Fastmarkets, tells us.<\/p>\n
\nThe EU\u2019s deforestation law requires producers to trace each product shipment back to the specific real estate plots of land that are or could be linked to the shipment. That means providing the exact geographic location coordinates like those from a GPS.<\/p>\n\n
\nThe EC defines global deforestation as the conversion of forests to agricultural use, whether human-induced or not, taking place worldwide.<\/p>\n