EU agrees law banning import of goods linked to deforestation

European Union flags fly outside the European Commission building in Brussel on June 16, 2022. (KENZO TRIBOUILLARD / AFP)

BRUSSELS – The European Union agreed on Tuesday on a new law to prevent companies from selling into the EU market soy, beef, coffee and other commodities linked to deforestation around the world.

The law will require companies to produce a due diligence statement proving that their supply chains are not contributing to the destruction of forests before they sell goods into the EU – or they could face hefty fines.

"I hope that this innovative regulation will give impetus to the protection of forests around the globe and inspire other countries at the COP15," said the European Parliament's lead negotiator, Christophe Hansen.

The new law will apply to soy, beef, palm oil, wood, cocoa and coffee, and some derived products including leather, chocolate and furniture

Deforestation is a major source of greenhouse gas emissions that drive climate change and will be in focus at a UN COP15 conference this week, where countries will seek a global deal to protect nature.

READ MORE: COP27: Food firms detail plans to end deforestation by 2025

Negotiators from EU countries and the European Parliament struck the deal on the law early on Tuesday.

It will apply to soy, beef, palm oil, wood, cocoa and coffee, and some derived products including leather, chocolate and furniture. Rubber, charcoal and some palm oil derivatives were included at the request of EU lawmakers.

Companies would need to show when and where the commodities were produced and "verifiable" information that they are deforestation-free – meaning they were not grown on land deforested after 2020.

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They must also show that the rights of indigenous people were respected during production of the goods.

Failure to comply could result in fines of up to 4 percent of a company's turnover in an EU country.

EU countries and its Parliament will now formally approve the legislation. The law can enter into force 20 days later, although some of the rules come into force for 18 months.

EU member nations will be required to carry out compliance checks covering 9 percent of companies exporting from countries with a high risk of deforestation, 3 percent from standard-risk countries and 1 percent for low-risk countries.

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Countries including Brazil, Indonesia, Colombia and Malaysia have criticized the EU plan, warning that the rules will be burdensome and costly.

EU environment commissioner Virginijus Sinkevicius told Reuters on Monday he had visited or spoken with the governments concerned by the law, and the EU would work with countries to help build their capacity to implement the rules.