EU to enforce deforestation-free agricultural goods regulation
The European Union has once again underlined its policy for a green world without pollution, known as the European Green Deal, by issuing another regulation for its trading partners.
The Deforestation-free Products Regulation (EUDR), issued on June 9, requires exporters of 7 agricultural products, namely cattle, cocoa, coffee, palm oil, rubber, soybeans, and timber, to register the products in a database and provide information related to production, such as sources, producers, and geographical coordinates of cultivation/harvesting areas. This is to allow for backward tracking and data analysis through satellite imagery to determine if the products were produced in deforested or degraded areas, in order to reduce global deforestation and the importation of high-risk products into the EU. This regulation will be enforced on December 30, 2024.
A transitional period of approximately 18 months is being given to agricultural sectors and related exporters to prepare before the regulation takes effect. It is expected that the EU will soon issue supporting regulations to clarify the enforcement measures, such as designating responsible agencies, penalties, creating database systems, and grouping countries according to the risk level of deforestation. This is to establish the level of inspection for the reported information by businesses, with high-risk businesses subject to 9% inspection, medium-risk 3%, and low-risk 1%.
Small and medium-sized enterprises (SMEs) established before December 31, 2020, will have 24 months, until June 30, 2025, to comply before the measures are enforced.
Regarding negotiations with Thai government agencies and relevant private sectors, the Thai Rubber Authority is in the process of establishing a rubber cultivation database, while the Federation of Thai Industries is preparing guidelines for its members to comply with the regulation.
In 2022, Thailand's exports of rubber and related products to the EU amounted to US$1.73 billion, accounting for 11% of Thailand's total exports to the world.
Previous environmental measures included the Carbon Border Adjustment Mechanism (CBAM), with the latest progress being the publication of CBAM Regulation (EU) 2023/956 on May 16 of this year. This requires importers of 6 product categories, including steel, aluminium, cement, fertilisers, electricity, and hydrogen, to report the quantities of goods imported into the EU and the greenhouse gas emissions from the production process between October 1, 2026, and December 31, 2025. During the first 3 years, quarterly reporting is required, followed by annual reporting. As of January 1, 2026, importers will need to purchase a "CBAM certificate" based on the greenhouse gas emissions of their products.
Thailand has expressed its views on data reporting and calculation of greenhouse gas emissions, which are technical issues that may impose burdens on Thai businesses and exporters. They also propose that if the EU can certify the Thai National Greenhouse Gas Management Organisation, an NGO, it will facilitate Thai businesses in complying.
EU's trade regulations are likely to be the model for many countries, mainly export markets. These export markets generate revenue for Thailand. Therefore, as the EU moves forward, Thai businesses must understand and adapt to the upcoming changes to turn challenges into new trade opportunities.
