Committed to Diligence: Deforestation-Free Supply Chains

The EU has taken a significant step towards reducing global deforestation and strengthening sustainability and due diligence along global supply chains with the Deforestation Regulation. Starting from the end of 2024, the EU Regulation on Deforestation-Free Products (EUDR) will require compliance with extensive due diligence obligations for raw materials, including timber, rubber, soy, coffee, oil palm, cocoa, and beef, as well as products derived from them, such as chocolate, palm oil, rubber tyres, leather, or paper, in order to identify, prevent, and combat potential risks of deforestation, forest degradation, and human rights violations. Model simulations of the EUDR conducted in the study "Trade and Welfare Effects of New Trade Policy Instruments" demonstrate that the EUDR can contribute to sustainability despite moderate welfare losses. By reducing EU trade in agricultural and forestry products with a high risk of deforestation, deforestation in Brazil and Indonesia could potentially be reduced by 8 to 9 percent. The impact of the EUDR will depend on its effective implementation in cooperation with key trading partners, particularly less developed countries.