Introduction
The European Union (EU) has opened its internal market to third countries to meet their demand for raw materials and natural resources, making the EU a world leader in import dependency. (1) This sets the stage for a nuanced exploration of the environmental ramifications inherent in the EU’s consumptive patterns. Today, the EU bears direct responsibility for 16 per cent of global deforestation which is related to the consumption of forest-risk commodities (FRC). As a consequence of unregulated international supply chains in the commodity sector, Ursula von der Leyen conceded that the European excessive consumption of commodities was fostering a sense of complicity, leading to the result that “They[the Europeans] no longer want to buy products that are responsible for deforestation or forest degradation”. The latter is the rationale behind the EU Deforestation Free Commodities and Products Regulation (EUDR), which the EU primarily designed to ensure that supply chains are risk-free from forest-damaging practices. By doing so, the EUDR becomes a tool to achieve objectives beyond its jurisdiction, exerting legal influence both within and outside the EU. This prompts the following inquiry: RQ: How is external governance designed when implementing forest-risk commodity due diligence in third countries?
Therefore, this contribution aims to evaluate the modes of external governance and assess the mechanism of Europeanisation laid down in the EUDR. Due to the outstanding implementation, it is currently impossible to analyse the effectiveness of external Europeanisation, i.e. the de jure changes at the third-state level.
This paper argues that assessing EUDR through the assumptions of the EU external governance and Europeanisation literature is only partially useful. It argues that the EUDR is an unprecedented mix of externalisation of the EU ‘acquis communitaire’ through the logic of consequence and appropriateness application and transaction-level territorial extension of EU law. The combination is suggested to be a fruitful interrelationship to overcome the complexity and uncertainty of ‘wicked’ policies.
Examining the EUDR from an externalisation and territorial extension perspective of EU law acknowledges its impact beyond the EU. Analysing internal legal provisions laying down EU presence first, then laying down the EU concrete action in this policy from an externalisation point of view shows how the EU seeked to expand its governance model to third countries. Through this case study, we gain insight into a case-specific promotion of global sustainable practices in the EU’s external action, which contributes to the discourse on transnational governance and the EU’s role in shaping environmental standards worldwide.
EU Presence: The Wicked Problem of Deforestation and the Legal Provisions in TEU and TFEU
Managing deforestation presents numerous challenges due to a multifaceted array of issues with 1) diverse stakeholders, 2) overlapping causes, 3) conflicting interests, and 4) power dynamics, characterising this policy field as a ‘wicked problem.’ Addressing this multifaceted issue in the EU extends beyond environmental concerns, interweaving into the broader tapestry of sustainable trade and environmental protection.
Regarding the Union’s obligation to protect the environment and safeguard biodiversity, Article 3 (3) of the TFEU explicitly designates environmental protection as a core objective of the Union’s actions. Furthermore, Article 21 (TEU) clarifies the commitment of the EU in fostering sustainable development in its external action. It lays down the Union’s external trade relationships and outlines environmental principles guiding the Union’s relations with the broader world. Crucially, the same article underscores the Union’s steadfast commitment to sustainable development by “help[ing] to develop international measures to preserve and improve the quality of the environment and the sustainable management of global natural resources”.
The detailed legal provisions within the TEU and TFEU, coupled with the operational action scheme of the European Green Deal, form a robust foundation for the EU’s initiatives against deforestation. Within its ambit, the Commission’s communication on ‘Stepping up EU Action to Protect and Restore the World’s Forests’ underscores the EU’s heightened commitment to combatting deforestation beyond its borders via regulatory and non-regulatory measures.
From VPA to Hard, Binding, and Unilateral Policies
The EU initially aimed to combat deforestation related to trade, focusing only on illegal timber logging. The 2003 FLEGT Regulation empowered the EC to develop Voluntary Partnership Agreements (VPAs) with timber-exporting countries, guiding the import of the Forest Law Enforcement, Governance and Trade (FLEGT)-licensed products. VPAs reflected the EU’s global fight against illegal logging, emphasizing experimental governance including good governance and capacity building in third countries.
In 2010, the EU reinforced the FLEGT Regulation by implementing the EU Timber Regulation (EUTR). The EUTR shifted from voluntary measures in developing countries to a legally binding demand-side policy, targeting entities putting timber on the EU market. The EUTR implements various provisions that oblige domestic producers and importers to verify that their products are traceable and logged legally through a Timber Legality Assurance System (TLAS).
By enacting a binding regulation to govern trade in forest-risk commodities (FRCs), the EU is hardening corporate business accountability in commodity supply chains with the intention of curbing its impact on commodity-driven deforestation.
The European Union Deforestation free Supply Chain regulation (EUDR) is designed as a unilateral and hierarchical regulation by prohibiting the entry of seven commodities into the EU market if there is a substantial risk for embodied deforestation. FRCs comprise direct products of deforestation, like wood and its derivatives, and other commodities contributing to deforestation, including soy, cocoa, coffee, palm oil, and cattle. Taking a cue from the EUTR, the EUDR requires mandatory due diligence statements from all operators placing FRCs in question on the EU market. This process will allow the operator and traders to certify that the risk of deforestation caused by the cultivation and animal husbandry is prevented and, at best, null and void.
Figure 1 Overview of the anti-deforestation regulations (compiled by the author)
EU Action: Hierarchical Governance as the Mode of Governance
If one understands “governance as a tool, strategies and relationship used by governments to help govern”, state authority can be understood as a form of command-and-control structure. Scholars argue that it arises when states impose regulations or codes of conduct on other actors, enforced by consequences and incentives to accomplish shared objectives. In this sense, the EUDR adopts a hierarchical structure that features distinct command and control components and formalised procedures and rules. The EUDR’s top-down policy formulation is apparent from its mandates and procedures, underlining a staunch adherence to hierarchical principles. Not only is the concentration of decision-making power at the EC level indicative of this, but the EC is also a leading institution in investigating and controlling due diligence statements of operators placing products on the European market concerning risk level classification of third countries. National competent bodies responsible for regulating and implementing these criteria will conduct compliance assessments for merchandise. Operators and traders must comply with deforestation-free product requirements; otherwise, they not only risk losing access to the European market for a certain period but can also be sentenced to up to a penalty of four per cent of the annual turnover in the preceding year.
As outlined in the regulation, the measures are mainly aimed at operators. As compliance with the mandatory due diligence obligation has no direct impact on the national laws of a particular country, a so-called territorial extension of EU law can be observed. Territorial extension is defined as. a “territorial connection with the EU, but where an assessment of compliance with the law requires an evaluation of foreign conduct and/or third country law.” The transaction level territorial extension probably best describes the intention by the EU since it only applies to products deemed for the European internal market
2.4 Perspective on Externalisation of EU Internal Policies Through Three-Tier Country Risk Benchmarking System
The EUDR includes a country-based risk assessment framework, which evaluates the likelihood of non-compliance with the requirement for zero deforestation. The risk assessment by the EC aims to establish the level of due diligence obligations for traders and operators. When the EUDR was launched, every country is currently initially deemed standard risk. Within 18 months of the regulation’s implementation, the EC will categorise producing countries as low, standard or high risk. The implementation of the EUDR, with its comprehensive risk assessment framework, seamlessly paves the way for an exploration of the External Incentives Model (EIM) proposed by Schimmelfenig. The cost-benefit calculation works the following way: The higher the risk of circumvention and deforestation, the more extensive due diligence for operators based in higher-risk countries, and the increased on-site checks of operators and traders.
Two different criteria flow into the country-specific assessment model: 1) the present deforestation and forest degradation rates and 2) the legal and policy structures related to these matters. As regards the second criterion, the regulation specifies good governance factors such as forest governance, transparency, stakeholder involvement and the rule of law in general terms as crucial indicators. Notably, the EC’s consultation on these matters involves state 1) authorities, 2) operators, 3) NGOs, 4) indigenous groups, 5) local communities, and 6) civil society. Following the ‘logic of consequences’, this policy approach is a form of conditionality that is supposed to manipulate third countries’ cost–benefit calculations. It can be understood as a direct incentive for third countries to change their domestic policies to protect minorities better and enforce more promising forest protection laws.
Tackling the Roots of Deforestation Through the Logic of Appropriateness
To facilitate enhanced exchange and capacity building, the EU and its Member States aim to adopt a jointly coordinated approach with producer countries and international stakeholders to tackle the underlying reasons for deforestation. This aligns with the socialisation perspective, where norms and values shape behaviour based on what is deemed appropriate in a given context. The law involves creating comprehensive strategic frameworks and “mobilising relevant Union instruments.” This demonstrates a commitment to sharing and exchanging knowledge, expertise, and resources, fostering a collaborative environment towards addressing deforestation and forest degradation. The EU adopts an approach underpinned by the institutional logic of appropriateness to prevent deforestation-related products from entering markets lacking mandatory due diligence. The regulation prioritises pushing for trade in products free from deforestation and implementing equivalent measures by key consumer nations. The EU intends to create a standard framework that institutionalises deforestation-free practices by implementing these measures.
Furthermore, the EU’s ambition to change forest governance is intricately tied to the institutional logic of appropriateness. This institutional logic seeks to establish a normative order where sustainable and inclusive governance becomes the accepted and expected standard
Conclusion
To conclude, the External Europeanisation of the EU through the EUDR is a praiseworthy attempt to tackle global deforestation. The EUDR’s hierarchical governance structure, which implements strict top-down policies, establishes a robust mode of governance. Nonetheless, to ensure external governance success, the EU must improve transparency in the three-tier benchmarking system and clarify the steps that the supply side can take to improve its classification situation. Full disclosure of assessment parameters can incentivise both third countries and member states, fostering proactive engagement with the risk assessment process.
Additionally, the EU should clearly outline plans for defining “appropriate instruments” and establish new partnerships to combat the causes of deforestation. Whilst the EU’s emphasis on conditional is commendable, following the ‘appropriateness logic’ needs a more detailed roadmap outlining these EU’s tools at its disposal and the exact configurations of partnerships the EU envisages. Clarity can encourage active participation and collaboration from all stakeholders within the EU’s purview, such as producer countries, indigenous groups, and local communities.
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