Europe is obsessed with passing new environmental laws which threaten American businesses to the tune of billions of dollars.
The US government is on a mission to make life easier for American companies selling products abroad. That means battling against aggressive regulations designed to make doing business more difficult and expensive. Wading through the thicket of red tape is no easy task – especially in Europe. The European Union loves creating new green rules.
Take the EU Deforestation Regulation (EUDR for short). The US Trade Representative’s office says it threatens a whopping $8.6 billion in American exports. Europe says it just wants to save the planet – but its actions don’t back that up. Its regulations harm nature more than help it. The EU presses ahead with the EUDR because it gives favorable treatment to European businesses, not because it’s good for the planet.
Europe says it wants to stop importing products made by companies which cut down rainforests. That’s all very well, but the paperwork the EUDR requires to prove a company’s supply chain is deforestation-free is ‘burdensome,’ in the words of the US Trade Agency. That’s putting it lightly. Researchers from GlobalData estimate the EUDR will add a staggering $1.5 billion in compliance costs to law-abiding companies. When President Trump mentions non-tariff trade barriers, this is what he means.
The EUDR works by assigning countries a ‘risk classification’ based on deforestation. Even though Europe says the US is ‘low-risk,’ American companies still have to comply with billions of dollars’ worth of paperwork to be allowed to operate in the European market. At one point, the EU flirted with creating a ‘zero-risk’ categorization to ease compliance for countries with next to no risk of deforestation, but it has since dropped that idea.
Looking closely at the way the EUDR works, it doesn’t take long for the façade of impartiality to crumble. In a clear case of favoritism, EU members automatically get a ‘low-risk’ classification. Brussels is shamelessly skewing its eco-laws in Europe’s favor. No wonder the US Chamber of Commerce calls out the EUDR as an ‘unfair trade practise.’
The EUDR’s workings are absurd. To calculate deforestation risk, the EU uses a metric called ‘total forest cover,’ failing to distinguish between different types of forestry. That means EU countries get away with replacing ancient forests with modern monocultures. Sweden, for example, has the most ‘old growth’ forests in Europe, covering 70% of its landmass – but it is tearing them down faster than the Amazon. Neighboring Finland has received €7 billion in EU fines for deforestation.
Since they are both EU members, they still get a ‘low risk’ status under the EUDR. Meanwhile, other countries with stellar records on deforestation get worse ratings. Malaysia, for example, is ‘standard risk,’ significantly increasing the compliance burden and the cost of selling in Europe. That’s despite it having one of the most impressive records in the world on deforestation.
The EU’s decision to penalize Malaysia seems to be based on out-of-date stereotypes about southeast Asian industry, backed up with data from years ago which ignores recent progress and has various technical faults. On imported items like palm oil, which appears in countless groceries and bathroom products around the world, Malaysia has set an example for other countries on how to reduce the risk of deforestation. And yet, it still receives the sharp end of European eco-laws because it is not an EU member.
Through environmental schemes like the MSPO and huge progress in sustainable palm oil technology, Malaysia has slashed its footprint on the natural world. According to Global Forest Watch, ‘primary forest loss’ is down more than half as of 2022. The results of those efforts are plain to see. Unlike many European countries, Malaysia has kept a promise to keep more than 50% of its territory under forest cover.
None of this crops up in the EUDR’s assessment of deforestation risk. The European Union’s priorities are obvious. Stopping deforestation takes a backseat to punishing non-European economies – like Malaysia and the US. If the European Union is allowed to continue legislating against foreign companies in the name of the environment unchecked, the US – and the rest of the world – will lose out to the tune of billions of dollars.
European green laws do nothing to stop deforestation or protect the planet. They succeed only in safeguarding domestic companies from foreign competition, including hardworking American exporters. But with President Trump in the White House, Europe finds its green lawmaking under more scrutiny than ever before.
Jason Reed is a policy analyst and political commentator who has contributed to more than 100 major media outlets across 15 countries. Read more at jason-reed.co.uk and follow him @JasonReed624.