EU-China Tensions Escalate as China Rejects EUDR Regulations

Posted on July 11, 2024   |  

The European Union is facing a turning point in its trade and regulatory history. The recent outright rejection of the EU's Data Regulation (EUDR) by China has not only triggered a diplomatic crisis but also jeopardised a significant portion of the EU's economy. With over 40% of all timber furniture and paperboard exports hanging in the balance, the EU's signature policy is standing on the brink of crisis. 
 

Chinese opposition to the EUDR is strongly against the sharing of geolocational data due to "security concerns." This highlighted by GD Holz, the German timber trade association, reflects the growing rift between two global forestry giants.
 

This development closely reflects the Biden Administration's intensified efforts to get the EU to postpone its EUDR enforcement, following a caution from 27 U.S. senators. These legislators compared the EUDR to a 'non-tariff trade barrier' that could disrupt the substantial $3.5 billion Euro-American timber trade.
 

China's dominance in the global timber product supply chain is undeniable, commanding over 30% through its expansive Belt and Road initiative. In the previous year, the nation's share of timber furniture imports into the EU skyrocketed to 47%, overtaking other major exporters like Turkey(10.2%), Ukraine(10.1%), and Vietnam(5.1%).
 

As the EU's principal source of paperboard boxes, China contributed 41% of the imports, leading the market over competitors such as Turkey(20.3%), Serbia(7.7%), and Switzerland(7.4%).
 

The implementation of the EUDR has been widely criticised, with 20 out of 27 European Agricultural Ministers calling for a postponement. This sentiment resonates with nations across various continents, including Australia, New Zealand, Brazil, Indonesia, and Malaysia, reflecting a global concern for strict regulations.
 

Interestingly, the EUDR debate has united the United States and China, both powerhouses in forest product manufacturing, in their shared concerns. Geographic data distribution in China is tightly controlled and limited to entities sanctioned by the State Council's surveying and mapping department.
 

The United States (like China) expressed concerns regarding geolocational mapping in a letter co-signed by Trump supporters, Biden supporters, and Independents in the American South “The EUDR imposes a geolocation traceability requirement that mandates sourcing to the individual plot of land for every shipment of timber product to the EU,” wrote the senators to Ms Tai.
 

On 30 December 2024 (30 June 2025 for small businesses), the EUDR will go into effect, marking a crucial step in the global timber industry.