Business & Environment


October 30, 2023

Navigating the New Norm: Thailand's Path in the Wake of the EU Deforestation Regulation

Understanding the European Union Deforestation Regulation (EUDR)

The European Union's bold step in combating global deforestation presents a new regulatory landscape for international trade partners, including Thailand. Understanding the EUDR is crucial for local stakeholders, as it signals a shift towards sustainable practices mandated by international law.

The EUDR Defined

The recent EU Regulation, officially termed as Regulation 2023/1115, replaces the previous Regulation 995/2010, aiming at stronger control over commodities linked to deforestation. This forms part of the EU's comprehensive Green Deal and Digital Strategy, focusing on sustainability and the preservation of the environment.

What does EUDR mean for Thailand?

Thailand, as a significant global supplier of rubber and other commodities, faces a direct impact from the EUDR. Thai businesses dealing in these regulated commodities must now provide verifiable proof that their products do not contribute to deforestation, marking a significant shift in supply chain management and accountability.

How will EUDR impact Thailand's industry?

The impact on Thailand's rubber industry is particularly profound, given the sector's contribution to the economy. Smallholders, who are a backbone of this industry, lack awareness and need structured training on the EUDR's implications. The regulation necessitates Thai businesses to:

  • Provide precise geolocation data for their products.
  • Establish a system of due diligence tracing product sources.
  • Prove that their products are deforestation-free.

Documentation and Operational Challenges

Smallholders face increased operational costs due to the need for detailed transaction documentation. Our research shows that while farmers' groups and cooperatives maintain records, intermediaries often do not, which complicates compliance with the EUDR.

Land Tenure and Legal Issues

Issues surrounding legal land tenure could pose a significant risk of excluding smallholders from EU supply chains. Addressing the local legal complexities, such as slow issuance of land certificates, is imperative to ensure inclusion and adherence to EUDR standards.

Agroforestry Practices

Agroforestry practices in Thailand must be considered within the context of the EUDR's definitions of forest and deforestation. It's essential to ensure that sustainable agroforestry practices are not discouraged by the regulation, especially as they can be seen as a business opportunity by smallholders who manage their land responsibly.

Value Chain Governance

Understanding the complexity of the value chain, levels of trust between stakeholders, and transparency of information is critical. This understanding can influence the EUDR’s impact on production systems and should inform how actors within the EU approach support for those in the supply chain.

Strengthening Farmers' Organizations

Efficient organization by smallholder groups and cooperatives can enhance their negotiating power, improve governance, and ensure a transparent flow of information, thereby attracting buyers and meeting the EUDR requirements.

Certification Schemes and Market Demand

Certification schemes like the FSC play a pivotal role in supporting smallholders. However, market demand for certified products is necessary to incentivize upstream participation in these schemes.

Alignment with Existing Standards

Clarity on how existing standards and innovative systems like RubberWay align with the EUDR will guide businesses in ensuring compliance. For instance, the Rubber Authority of Thailand's engagement with the EU to discuss national sustainable forest management standards is a step in the right direction.

How can Thailand's industry adapt and comply?

Adaptation strategies should include:

  • Enhancing transparency and adopting technologies for accurate data on the origin of goods.
  • Investing in compliance tools like LiveEO's advanced geospatial analytics platform.
  • Driving sustainability workshops to align stakeholders with compliance prerequisites.

Conclusion: Looking Forward

The EUDR demands a significant paradigm shift for Thailand's industry. However, with a focused approach towards sustainable practices and diligent compliance enforcement, Thailand can navigate this new regulatory landscape successfully. By embracing these changes, Thailand can reinforce its position as a leading rubber supplier while pioneering sustainable and eco-conscious business practices in the region.

To truly understand what EUDR means for Thailand is to acknowledge the turning tide towards prioritizing environmental sustainability — not as an option but as an integral part of global trade and business.

Compare EUDR with EUTR after delving into the EUDR's impact on Thailand.

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