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In a significant development for global oils markets, EU negotiators have agreed to delay implementation of the bloc's contentious Deforestation Regulation (EUDR) by a full year. The move eases pressure on major commodity suppliers, chief among them palm oil, following widespread criticism of the regulation's bureaucratic requirements and its potential negative impact on trade flows.
The European Commission, the European Parliament and the Council of the European Union reached a preliminary agreement in Brussels on Thursday over amendments to the regulation. The delay, which is twice as long as the period originally proposed by the Commission, gives operators throughout the palm oil supply chain crucial time to adapt to the new rules, removing the need for the shorter additional grace period that had previously been sought.
The EU regulation strictly targets deforestation linked to imports of key commodities into the bloc. Palm oil is a primary target of the law, alongside other commodities such as soybeans, coffee and cocoa. Policymakers had faced intense pressure from palm oil-producing nations and industry within the EU to amend the law in order to avoid market disruption ahead of its entry into force in its current form this month.
Explaining the rationale behind the delay, the Council of the European Union stated: "The aim is to simplify the implementation of the existing rules and postpone their application to give operators and traders and authorities enough time to prepare adequately."
The provisional agreement still requires final formal approval and publication in the EU's Official Journal before it becomes enforceable law.
Source: Reuters