With the increasing
recognition of the role of trade measures and policies in advancing
environmental objectives, various countries are taking recourse to a wide range
of environment-related trade measures. The European Union (‘EU’) is the
frontrunner in adopting such measures and its ‘green’ measures are the subject
of intense debate amongst the World Trade Organization (‘WTO’) membership due
to their extraterritorial application and the potential to act as non-tariff
barriers to trade. The focus of this paper is on the EU’s recent regulatory
initiative aimed at addressing the problems associated with commodity-driven
deforestation in global value chains, the Regulation on Deforestation-Free
Products (‘EUDR’). The paper focuses on the compliance requirements under the
EUDR and the implications for smallholders. Compliance requirements under the
EUDR (e.g., traceability demands) are likely to put smallholders in a
vulnerable position, particularly impacting the exports of developing economies
in the Southeast Asian region, a region which is one of the top global
exporters of commodities under the ambit of the EUDR In this context, the broad
objective of this paper is to discuss the challenges posed by the EUDR for
smallholders and provide recommendations for a more inclusive approach.