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Widely celebrated as a landmark regulation that would combat the worldwide crisis of forest loss.

However, the revised version of the EU's deforestation regulation, once heralded as the crown jewel of the Green Deal, has emerged in a severely weakened state, prompting alarm from its original architect and green lawmakers.

"The regulation was hollowed out," said Hugo Schally, pointing to the removal of key obligations for downstream traders to verify the origin of products 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 complicate the task of authorities.

Political Dismantling

Green party MEP Marie Toussaint was more blunt, describing the postponements, exceptions and new loopholes – including one for paper goods – as the "systematic weakening" of the law.

This outcome is a far cry from the demands of over 1.2 million EU citizens who signed a petition in 2020 calling for a ban on deforestation-linked products.

When launched in 2021, the EU's climate chief Frans Timmermans called it "the most ambitious law proposed to fight deforestation."

From Ambition to Compromise

The law's unravelling has been interpreted as the European Union retreating from its green talk. The proposal encountered two major postponements, reportedly over IT issues, which drew condemnation.

"By reopening this file rather than fixing a technical issue, authorities invited political interference," commented Toussaint.

In its first draft, the law mandated that firms to track commodities to their specific geographic origin using GPS coordinates, holding them accountable for deforestation in their supply chains with criminal charges and large financial penalties.

"This was not red tape for its own sake," Schally said. "It was the mechanism that ensured enforcement, created a verifiable paper trail, and prevented firms from obscuring their activities behind opaque production networks."

Mounting Pressure

However, the rigorous checks triggered a backlash in the EU capital from multinational corporations, exporting nations, conservative political groups and member states with forestry industries.

Analysts point to last year's EU elections as a turning point, shifting the balance of power less favorable toward green regulations.

"Additional intense pressure has come from big trading partners outside the EU," noted expert Andreas Rasche, suggesting the commission gave in to some requests during negotiations.

The Weakened Final Text

The passed law includes several critical weakenings:

• Retailers and traders were largely freed 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 – geopolitical adversaries of the EU – will face “high risk” scrutiny.

"Rather than strengthening downstream obligations, it stripped them back," said Schally. "Moving obligations upstream, it reduced accountability."

Uncertainty for Companies

The protracted process and revisions have also created annoyance for businesses that complied early.

"We feel very annoyed because we put a lot of effort into preparing," stated a coffee company executive. "We invested in software, followed seminars and built a team... now they’re saying it may be changed. It’s a big frustration."

The Commission's Stance

An EU representative defended the outcome, stating: "The commission has responded to concerns and acted to ensure a pragmatic and balanced implementation."

"The new text provides for predictability, which is crucial for companies and national regulators to effectively enforce this very important regulation."