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JASON REED: When Regulators Get Over-Confident, It’s The Hardworking Poor Who Suffer

FOR THE EU, virtue-signalling about green issues knows no bounds.

Not long ago, Brussels bureaucrats gave the nod to a hefty new set of rules called the Due Diligence Proposal. This bundle of red tape is likely to have a substantial effect on all kinds of markets in Europe, from food to fuel. Effectively, this law compels manufacturers of countless products go through a new ‘verification’ process before being able to sell their products in Europe.

All this is part of a campaign by the EU to reduce deforestation, but there is very little publicly available information about what the new ‘verification’ checks will actually involve, how much they will cost and how big an obstacle they will present to genuine companies doing business in Europe.

Much has been made about the new law. When picking it apart, there are so many obvious problems to choose from, it is hard to know where to start. Perhaps most fundamental of all the flaws is the substantial risk that it might make deforestation worse, not better. This is because one of the key products which will be hit by the miles of red tape and doubtless enormous extra costs of the EU’s new verification process is palm oil.

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If you want to chop down as few trees as possible while making a vegetable oil, you make palm oil. There’s no doubt about that. Even the WWF says attacking palm oil isn’t a sensible course of action, because it is the most land-efficient product out there (which also makes it the cheapest – a very important asset when food inflation is at records highs and we are in the midst of a cost of living crisis.)

As it stands, the new EU law might well end up forcing manufacturers of products ranging from cosmetics to food to switch to a different oil if importing palm oil becomes too costly and time-consuming thanks to the new rules. Alternative products, which might include rapeseed, soybean, coconut and even olive oil for some items, are invariably less land-efficient, and therefore worse for both the planet and our wallets.

But there is another aspect of the law which has not gotten enough attention. It’s easy to forget that when we in the Western world make sweeping policy decisions like this, we have a wide impact on the whole world, not just our neighbours.

Decisions made by the EU go far beyond European borders, especially when it comes to highly decentralised global industries like food production. The Due Diligence Proposal risks making life a lot harder for thousands, if not millions, of smallholder farmers around the world in remote corners of the world, since they rely on exporting products like palm oil around the world to make ends meet.

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There are plenty of obvious problems with the EU’s approach which could cripple poor farmers. The short implementation deadline, combined with requirements for geolocation and traceability, are a toxic mix.

Being able to trace where a product has come from is important in rooting out deforestation in supply chains, but to meet the requirements the EU wants, millions of farmers in the remote countryside of places like Papua New Guinea, Malaysia, Indonesia and some parts of Africa and Latin America will first need to be contacted, informed of the new rules, equipped and trained to follow them.

That’s no small task. Most of those smallholder farmers operate through middlemen, for example, which means many of the European companies they sell to don’t have direct contact with them. Naturally, the EU seems inclined to make things more difficult for those who want to sell things to Europe and participate in the European markets (as well as their European customers) even when this might well make their business unviable as things stand.

Put simply, farmers around the world who produce essential goods that Europe relies on will need a lot more help and support than they are going to get in order to comply with these new rules. When the EU overregulates American technology companies, it’s harmful, for all kinds of reasons – but at least those companies can afford to maintain entire compliance departments to make sure everything is up to scratch. How are smallholder farmers producing palm oil supposed to compete with the regulatory might of the EU?

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None of this seems to be of much concern to the Brussels bureaucrats who are enthusiastically pushing these measures through. As long as they get to signal virtue about how hard they are working to protect the planet, they’re happy. They pat themselves on the back for the new rules and regulations they dream up to stop what they call the “importation of deforestation”. Meanwhile, poorer communities around the world suffer.

It’s not like no one has voiced these concerns to the EU. Malaysia has been particularly vocal, warning that these are uncharted waters and the effects for arguably some of the world’s most essential farming communities could be substantial. Sime Darby, the world’s biggest producer of sustainable palm oil, is going out of its way to address environmental concerns by going net-zero, planting millions of trees and reforesting hundreds of hectares of land. The EU doesn’t seem to be interested in this, because it’s inconvenient for their virtue-signalling narrative about the way the world works.

Myopic, broad-brush political decisions like the EU’s insistence on pushing through the Due Diligence Proposal without paying proper attention to the problems with it can have very far-reaching consequences. Those who are determined to implement new rules like this should have to face up to the reality of what they are doing and the effect it will have on hardworking people’s livelihoods – even if those people live and work far away from home.

Jason Reed is a writer and broadcaster on politics and policy for a wide range of outlets.

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