Brussels, Belgium — The American paper industry is expressing concern over a new European Union regulation that mandates strict traceability of timber, a move that could potentially disrupt $3.5 billion in trade and increase costs for everyday hygiene products such as diapers and sanitary pads. The European Union’s Deforestation Regulation, which seeks to prevent global forest depletion, threatens significant implications for both U.S. producers and European consumers.
The regulation intends to curb the role European consumption plays in global deforestation, which accounts for approximately 10% of the world’s total. This includes commodities like timber, beef, coffee, and cocoa. According to EU officials, imports of these goods will soon require comprehensive documentation verifying their origin to avoid heavy penalties, a requirement aimed at protecting biodiversity and reducing environmental impact.
Mark Pitts, executive director of the American Forest and Paper Association, expressed concerns about the feasibility of the regulation. He stated that the diffuse nature of pulp supply chains makes it extremely difficult to trace raw materials back to their exact origins. He also highlighted a typical two-year delay between tree harvesting and fiber production, adding complexity to compliance.
The American Forest and Paper Association is pushing for a postponement of the regulation, currently set to take effect by the end of the year. They are advocating for the paper sector to be classified as low risk for contributing to deforestation, which would exempt them from stringent traceability requirements. U.S. government officials have also intervened, requesting a delay and indicating the regulation poses serious challenges for domestic industries.
The impending policy could particularly impact major corporations like Procter & Gamble and Kimberly-Clark, leading suppliers of fluff pulp used in producing diapers and feminine hygiene products. These companies fulfill about 60% of the EU’s needs in these areas, positioning them at a critical juncture in the supply chain.
Adalbert Jahnz, a spokesperson for the European Commission, explained that the requirement does not extend to tracing each wood fiber to a specific plot but involves documenting the geographic locations of the land where bulk commodities are sourced. This approach aims to streamline the tracking process without overwhelming stakeholders.
Pitts has reported early disruptions, noting that uncertainties regarding the new law have already affected supply chain contracts slated for the coming months, putting significant trade agreements at risk. He did not specify which companies are currently impacted but underscored the broad implications for the industry.
Both Procter & Gamble and Kimberly-Clark have responded to the impending regulations, with a spokesperson from P&G affirming their compliance with existing laws and the company’s commitment to adhere to the new EU regulations through stringent sourcing guidelines. Meanwhile, Kimberly-Clark has not provided comments on the matter.
The European Union’s move to enforce such stringent environmental standards highlights a growing trend among governments and regulatory bodies to address environmental issues through policy. While this represents a progressive step towards sustainability, it also poses new challenges for international trade relations and global supply chain operations, necessitating a balance between ecological responsibilities and economic impacts.