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It was a landmark law that would help stop the worldwide scourge of forest loss.

But, the final version of the European Union's deforestation regulation, once touted as the flagship policy of the European Green Deal, has emerged in a severely weakened state, leading to alarm from its original architect and green lawmakers.

"It has been hollowed out," said the law's original author, pointing to the exclusion of key obligations for downstream traders to check the provenance of commodities like palm oil, soy, wood, beef, rubber, cocoa and coffee.

He warned that a reduced number of responsible companies, less information collected, and less precise origin data would hinder monitoring and legal action.

Political Dismantling

Environmental MEP Marie Toussaint went further, describing the postponements, exceptions and new loopholes – such as one for paper goods – as the "systematic weakening" of the law.

This final text stands in stark contrast to the demands of over 1.2 million EU citizens who signed a petition in 2020 demanding a prohibition of goods linked to forest destruction.

At its launch in 2021, the EU's climate chief the European commissioner trumpeted it as "the toughest legislation ever put forward to fight deforestation."

From Ambition to Compromise

The law's unravelling is seen by critics as the EU walking back its environmental promises. The proposal encountered two major postponements, ostensibly over IT issues, which sparked criticism.

"By revisiting the legislation instead of solving a technical issue, authorities invited political interference," remarked Toussaint.

In its first draft, the regulation required companies to trace goods to their exact plot of land using geolocation data, making them liable for deforestation in their supply chains with penalties and large financial penalties.

"This was not red tape for its own sake," the former official explained. "It was the mechanism that made the rules enforceable, established traceability, and prevented firms from obscuring their activities behind opaque production networks."

Mounting Pressure

Yet, the rigorous checks triggered a backlash in Brussels from large companies, producer countries, conservative political groups and EU logging states.

Analysts point to last year's European Parliament elections as a turning point, creating a new political majority more skeptical of environmental rules.

"Additional intense pressure came from big trading partners outside the EU," noted expert Andreas Rasche, suggesting the EU yielded to some demands in trade talks.

Key Loopholes Introduced

The passed law features several critical weakenings:

• Downstream operators were largely freed from conducting rigorous checks.
• A new “low risk” category was created.
• 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," lamented Schally. "Moving obligations to producers, it reduced accountability."

Uncertainty for Companies

The protracted process and revisions have also caused frustration for businesses that complied early.

"It is very frustrating because we invested significant resources into preparing," stated Xavier Rombouts. "We purchased systems, trained staff and established procedures... now they’re saying it may be changed. It’s a big frustration."

Official Defense

A commission spokesperson supported the final law, saying: "The commission has responded to feedback and acted to ensure a pragmatic and balanced implementation."

"The new text ensures stability, which is key for business and national regulators to effectively enforce this very important regulation."