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Widely celebrated as a groundbreaking regulation that would curb the worldwide scourge of deforestation.

But, the revised version of the EU's deforestation regulation, previously touted as the flagship policy of the European Green Deal, has emerged in a significantly diluted state, leading to alarm from its original architect and green lawmakers.

"The regulation was hollowed out," stated Hugo Schally, pointing to the removal of crucial requirements for downstream traders to verify the provenance of commodities like palm oil, soy, wood, beef, rubber, cocoa and coffee.

Schally cautioned that a reduced number of responsible companies, fewer data points, and imprecise sourcing details would hinder monitoring and legal action.

Political Dismantling

Environmental vice-president Marie Toussaint went further, labeling the delays, loopholes and exemptions – including one for paper goods – as the "political dismantling" of the law.

This outcome is a far cry from the demands of over 1.2 million EU citizens who supported an initiative in 2020 demanding a prohibition of deforestation-linked products.

At its launch in 2021, the EU's climate chief the European commissioner trumpeted it as "the most ambitious law ever put forward to combat forest loss."

From Ambition to Compromise

The regulation's dilution is seen by critics as the EU walking back its green talk. It faced two major postponements, ostensibly over technical problems, which drew condemnation.

"By revisiting the legislation rather than fixing a technical issue, authorities invited political interference," commented the Green MEP.

In its first draft, the regulation required companies to track goods back to their exact plot of land using GPS coordinates, making them liable for deforestation in their supply chains with penalties and hefty fines.

"This was not red tape for its own sake," Schally explained. "These rules were the tool that made the rules enforceable, established traceability, and prevented firms from obscuring their activities behind complex supply chains."

Mounting Pressure

Yet, the rigorous checks triggered a backlash in the EU capital from multinational corporations, exporting nations, rightwing parties and member states with forestry industries.

Analysts point to last year's European Parliament elections as a decisive moment, shifting the balance of power less favorable toward green regulations.

"Additional intense pressure has come from major export markets like the United States," noted expert Andreas Rasche, implying the commission gave in to some requests during negotiations.

Key Loopholes Introduced

The passed law features key dilutions:

• Downstream operators were mostly exempted from submitting due diligence statements.
• A new “low risk” category was introduced.
• A window for further "simplifications" was opened for next spring.
• Only four countries – Russia, Belarus, North Korea and Myanmar – will face “high risk” scrutiny.

"Instead of tightening rules for companies, it stripped them back," lamented Schally. "By shifting responsibilities upstream, it lessened the number of responsible firms."

Uncertainty for Companies

The delays and changes have also caused frustration for companies that prepared in advance.

"We feel very annoyed because we put a lot of effort into complying," stated Xavier Rombouts. "We purchased systems, trained staff and established procedures... now they’re saying it may be changed. It’s a major letdown."

Official Defense

A commission spokesperson supported the final law, stating: "The commission has responded to concerns and taken action to ensure a pragmatic and balanced application."

"The new text provides for predictability, which is crucial for companies and national regulators to successfully implement this vitally important regulation."