Will the EU Delay the Launch of Deforestation-Free Products Regulation?
Questions and concerns continue to pile up as the European Union’s Deforestation-Free Product Regulation (EUDR) compliance deadline approaches. What is meant to address a global deforestation issue is instead, creating brand new problems for supply chains. How prepared are EU nations for accommodating inflated prices for, or all out shortages of, highly demanded products if complex supply chains need more time to compile information? The U.S. wood pulp industry is pushing back on the EU’s timetable arguing that neither the European Union nor the United States will fare well under a rushed deadline.
The U.S. paper industry has called the EUDR risky since America has been leveraging sustainable methods for thirty years. Compliance regulations imposed on an already stable and sustainability focused industry stand to disrupt a $3.5 billion dollar trade operation that supplies the 27-nation bloc with wood pulp used to make diapers and female hygiene products among other important things.
Unlike more targeted regions of the world, the United States has a well established system for harvesting and replanting trees. The compliance regulations feel like an unnecessary penalty. Meeting new trade standards will require a makeover of a complex supply chain and affect a lot of products made from wood pulp. A group of 27 state senators believe tracking along these entire supply chain routes is impossible and urged the government to request accommodations.
Why is the Pulp Supply Chain Complex?
Wood pulp has its own chain. Like most agricultural land in America, forested land is privately owned. Approximately 10.6 million private entities own land that produces lumber which makes it tricky to get GPS locations for harvested trees destined for lumber mills.
But tracking gets even tougher when examining the journey of pulp derived from the leftovers of a tree. About 40% of pulp comes from what is swept from the floor of a sawmill or collected off the forest floor after a harvest. It includes bark, branches, sawdust and tree stumps. It comes from several species of trees harvested from multiple locations.
Those bits and pieces don’t go straight to becoming diapers. The leftovers are stored for long periods of time, chipped, piled, pulped and then shipped overseas to be processed into a product. By the time wood pulp is ready to be made into a diaper or paper for a book there is no way to identify what bit of sawdust pulp came from where.
The U.S. Paper industry argues that EU regulations fail to consider lag time between harvest and processing which can be two years. There is no way of knowing the exact origin of current pulp supplies. This is a system intentionally built for the sake of a circular flow. Everything that can be used is used. If a tree is too small to be used for lumber it can eventually be used for tissues, diapers or paper and a harvested area can be fully replanted to begin the process over.
Will The United States Dissolve Trade With The EU?
The penalties for not complying are steep. Rather than face fines or outright bans, the United States change current trade agreements. If they do, supply of wood pulp decreases in the EU and consumers will see inflated prices for wood derived commodities. While there would be a shortage of pulp made products it would push consumers to look at other “tree free” options that use synthetic materials and might have an even greater footprint, or products made from recycled paper, of which the United States is the leading exporter. We might decrease pulp exports but increase recycled paper exports.
As it stands now, if the United States attempts to meet regulations it will increase operational cost driving the price of pulp higher and in turn increase what European consumers pay for things like diapers, sanitary pads, and other fluff pulp items. The purpose of the new regulations aims to decrease destructive deforestation practices that harm environments and communities. However, in this case it is putting pressure on a process that has a good track record for sustainable practices and creating a scenario for inflated prices of high commodity items.
At the time this article is being written the EU has not defined how the traceability information should be shared or uploaded into their system. And the United States appears to be far from meeting the December deadline. It looks as though European consumers will surely see price increases in the diaper aisle.