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Widely celebrated as a landmark piece of legislation that would curb the worldwide crisis of forest loss.

But, the final version of the European Union's deforestation regulation, previously heralded as the flagship policy of the European Green Deal, has been passed in a significantly diluted state, leading to alarm from its initial author and green lawmakers.

"The regulation was hollowed out," said Hugo Schally, pointing to the removal of key obligations for downstream traders to check the provenance of products like palm oil, soy, wood, beef, rubber, cocoa and coffee.

Schally cautioned that fewer obligated actors, less information collected, and less precise origin data would make enforcement and prosecution more difficult.

A Watered-Down Law

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

This outcome stands in stark contrast to the demands of more than a million European citizens who supported an initiative in 2020 demanding a prohibition of deforestation-linked products.

When launched in 2021, the EU's climate chief Frans Timmermans trumpeted it as "the toughest legislation proposed to combat forest loss."

From Ambition to Compromise

The regulation's dilution has been interpreted as the European Union retreating from its environmental promises. The proposal encountered two major postponements, ostensibly over technical problems, which drew condemnation.

"By reopening this file instead of solving a simple IT problem, authorities invited political interference," commented the Green MEP.

Originally, the law required companies to track commodities back to their specific geographic origin using GPS coordinates, making them liable for forest loss along their supply lines with criminal charges and hefty fines.

"This was not red tape for its own sake," Schally said. "It was the mechanism that ensured enforcement, created a verifiable paper trail, and stopped companies from hiding 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 EU logging states.

Analysts point to last year's EU elections as a turning point, creating a new political majority less favorable toward environmental rules.

"The other pressure has come from major export markets outside the EU," noted corporate sustainability professor, implying the commission gave in to some requests during negotiations.

Key Loopholes Introduced

The passed law features key dilutions:

• Downstream operators were largely freed from conducting rigorous checks.
• A new exemption for small operators was created.
• A option for more reductions was opened for next spring.
• Only a handful of nations – Russia, Belarus, North Korea and Myanmar – will face the strictest monitoring.

"Rather than strengthening rules for companies, it rolled them back," lamented the law's author. "By shifting responsibilities to producers, it lessened the number of responsible firms."

Uncertainty for Companies

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

"It is very frustrating because we put a lot of effort into preparing," said a coffee company executive. "We invested in software, followed seminars and built a team... now they’re saying it could be altered again. It’s a major letdown."

Official Defense

A commission spokesperson defended the outcome, stating: "The commission has responded to concerns and acted to ensure a pragmatic and balanced application."

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