Exporters of coffee, beef, soy, palm oil, and rubber need to prepare for the entry into force of a law that aims to prevent the shipment of products linked to deforestation to countries in the European Union.
The Philippine Exporters Confederation Inc. (Philexport) said the EU Deforestation Regulation (EUDR) or Regulation (EU) 2023/1115 will enter into force in December.
“Exporting products to the EU has become increasingly challenging with its new and emerging regulations as part of the EU Green Deal. These regulations aim to make the EU the first climate-neutral continent by 2050,” Bianca Pearl Sykimte, director of the Department of Trade and Industry-Export Marketing Bureau, said in a statement issued by PhilExport.
According to Sykimte, EUDR applies to entities exporting commodities such as cattle/beef, soy, coffee, coco, palm oil, rubber and wood.
“It requires these entities to demonstrate that their products are deforestation free and not linked to forest degradation.”
Philexport noted that these seven products, all of which are major drivers of deforestation, will no longer be sold in the EU if sourced from areas affected by deforestation or forest degradation practices.
The EUDR was “formally adopted” and came into effect on June 29, 2023 to prevent the importation of commodities linked to deforestation to curb forest loss, land degradation, and biodiversity loss.
“Companies have until December 30 this year to be compliant, except for micro and small undertakings, for which the regulation will apply from June 30, 2025,” said Philexport.
It further noted that businesses should now consider the impact of the EUDR on their supply chain due diligence to prepare for the new obligations that apply from December 2024.
Among the important considerations that firms need to be aware of, according to Philexport, is that the new measure covers a wide range of products.
“According to global law firm White & Case, the EUDR covers the said seven commodities as well as their many derived products listed in the annex to the regulation. Examples of these derived products are meat products, leather, chocolate, coffee, palm nuts, palm oil derivatives, glycerol, natural rubber products, soybeans, soybean flour and oil, fuel wood, wood products, pulp and paper, printed books.”
Citing the law firm, Philexport said it is important to check carefully which products are covered, with reference to the products’ tariff classification under the Combined Nomenclature.
Philexport said the EUDR applies to goods produced on or after June 29, 2023 (except for timber and timber products, which are covered if produced before that date and placed on the EU market from December 31, 2027). However, it does not apply to goods produced entirely from material that has completed its life cycle and would otherwise have been discarded as waste.
Philexport also said non-compliance with the EUDR will prevent access to and exports from the EU.
Citing Global legal intelligence platform Lexology, the umbrella organization of Philippine exporters listed the requirements that must be met by commodities to be able to export to the 27-member bloc.
Philexport said the commodities should be deforestation-free; they have been produced with the relevant legislation of the country of production in terms of environmental protection, land use rights, and labor rights; and they are covered by a due diligence statement.
It also reminded companies of the penalties for non-compliance. “These may take the form of fines of up to 4 percent of the company’s EU turnover, confiscation, or exclusion from public funding or contracts.”
Last year, the EU was the Philippines’s sixth largest export market with receipts reaching $8.4 billion.
“Food exports were valued at more than $400 million and included tuna, desiccated coconuts, preserved pineapples and pineapple juice, fruits and nuts, breads and pastries, rum and other distilled fermented sugarcane products,” Philexport said.
Business stakeholders such as officials of the Philippine Chamber of Commerce and Industry (PCCI) welcomed the resumption of free trade talks between the Philippines and the EU as this will strengthen bilateral cooperation and “deepen” economic ties between the two parties.
However, they noted that Philippine negotiators should also be “extra cautious in giving in to certain conditionalities imposed by the EU and ensure that these are justifiable and fair based on the country’s level of development.” (See: https://businessmirror.com.ph/2024/03/21/biz-groups-raise-concerns-ahead-of-resumption-phl-eu-fta-talks/_)
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