Institute for International Trade

Policy & Engagement 

WORKING PAPER No. 18

Implications of the EUDR on global palm oil supply chains

The EUDR aims to mitigate deforestation risks by requiring supply chain actors to submit geospatial data and conduct rigorous risk assessments.

Our latest working paper identifies significant challenges, particularly for palm oil suppliers. The stringent traceability and compliance demands of the EUDR could disproportionately impact smallholders who may lack the necessary resources. This regulation echoes previous market access tensions from the EU Renewable Energy Directive (RED) II, with major producers like Indonesia and Malaysia raising concerns.

Opportunities are seen through alignment with existing certification schemes such as Malaysia's MSPO, which could facilitate EU recognition. The EUDR's classification of countries by deforestation risk simplifies compliance for low-risk nations, encouraging proactive engagement with the EU for precise risk evaluations.

The authors emphasize the pivotal role of the Council for Palm Oil Producing Countries (CPOPC) in promoting dialogue and cooperation with the EU, advocating for the interests of producer nations. As the EUDR is implemented, extending timeframes, addressing smallholder challenges, and establishing support mechanisms are crucial. The paper highlights the importance of collaboration and leveraging local initiatives for a successful transition to deforestation-free trade.

Access Working Paper No.18

The views expressed here are the author’s alone and not those of the Institute for International Trade.

Image by AdobeStock_581555902 (licensed) by Strikernia