The upcoming EU Deforestation Regulation (EUDR) marks a major shift in global trade practices. The regulation aims to reduce deforestation and forest degradation by introducing strict requirements for products entering the EU market. However, the world’s two largest timber markets remain at odds with each other, with China and the US expressing serious concerns.
The EU Deforestation Regulation (EUDR) was designed to ensure that products placed on the EU market do not cause deforestation or forest degradation. The rules were announced at the end of 2023 and are expected to take effect on December 30, 2024 for large operators and June 30, 2025 for small operators.
The EUDR requires importers to provide a detailed declaration that their products comply with these environmental standards.
China recently expressed its opposition to the EUDR, mainly due to concerns over the sharing of geolocation data. The data is considered a security risk, complicating compliance efforts of Chinese exporters.
China’s objections are consistent with the US position. Recently, 27 US senators called on the EU to delay implementation of EUDR, saying it constitutes a “non-tariff trade barrier.” They warned it could disrupt $43.5 billion in forest products trade between Europe and the United States.
China plays a key role in global trade, especially in the timber industry. It is an important supplier in the EU, offering a wide range of products including furniture, plywood and cardboard boxes.
Thanks to the Belt and Road Initiative, China controls more than 30% of the global forest products supply chain. Any departure from the EUDR rules could have a significant impact on these supply chains.
China’s resistance to the EUDR could disrupt global timber, paper and pulp markets. This disruption could lead to shortages and increased costs for businesses that rely on these materials.
The consequences of China’s withdrawal from the EUDR agreement could be far-reaching. For the industry this could mean the following:
The EUDR represents a shift towards greater environmental responsibility in global trade. However, achieving consensus between key players such as the US and China remains a challenge.
China’s opposition highlights the difficulty of achieving international consensus on environmental regulations. It is critical that trade practitioners, business leaders and policymakers understand these dynamics.
When issues like this arise, it’s important to stay informed and involved, and consider how your organization can adapt to these changing regulations.