European Commission under Mounting Pressure to Rethink EUDR

The policy landscape surrounding the EU’s Deforestation Regulation (EUDR) has shifted quite dramatically since the beginning of the year. Donald Trump has played his part: the tariff war he triggered on returning to the White House is forcing governments everywhere to rethink approaches to regulation in the face of plummeting growth and competitiveness. The EU is no exception. Having been happy to sign off on the EUDR in 2024 (albeit with a delay to allow European companies to catch up), the European Commission’s two legislative partners – the European Parliament and the Council of Ministers – have now tabled ‘objections’ to the Commission’s implementation plans.

In their crosshairs is the controversial country benchmarking system, which assigns a ranking to Europe’s trading partners worldwide based on the risk of deforestation they pose. Hence, countries like the Federation of Russia and North Korea are deemed ‘high’ risk, while around 50 countries are seen as ‘standard’ risk, including Malaysia. All European member states have been considered by the Commission to be ‘low’ risk, a fact not lost on the EU’s trading partners.

The European Parliament’s objection took the form of an official vote in Plenary, which passed with a convincing majority. As is becoming increasingly common in European politics, the dominant centre-right European People’s Party (EPP) was willing to align with the new populist parties to its right to defeat the Commission’s plans. Such is the dire need for growth and competitiveness. The Council of Ministers’ objection came in the shape of a joint letter from a clear majority of 18 Member States. Both objections targeted the Commission’s benchmarking methodologies, specifically its use of outdated data to measure the wrong thing; however, neither legally compels the Commission to reopen the legislation. The rejections do, however, necessitate a political response.

The EU’s country benchmarking system ranks Malaysia as ‘standard’ risk for deforestation, unlike all EU member states, which are classified as ‘low’ risk.

In addition to institutional complaints about EUDR, a growing chorus of dissent from other quarters is becoming discernible. Industry groups are coming forward to raise their concerns, adding to the pressure on the Commission in the process. On 7 July, Mondel?z International joined the list of companies calling for a delay in the implementation of EUDR. At around the same time, a coalition of 16 agri-food associations wrote to complain about the cost burden EUDR would place on them.

So far, the Commission has resisted calls to reopen the legislation. But it cannot get away with not responding at all. Its preferred response is likely to be further regulatory ‘simplifications’, similar to the package it conceded back in April. The expectation is that both Parliament and Council would be content to accept further concessions short of a reopening of the legislation, but they could still choose to dig in. If they do, the Commission would be compelled to take further action. “La rentrée” in September (when Brussels returns from the beach) will prove decisive.

Therefore, while EUDR implementation is expected to proceed as planned on 30 December 2025, we anticipate an early review of the country benchmarking in the first quarter of 2026. Indeed, such a review was conceded mainly by the Commission in response to the EP Plenary vote on 9 July. In the Commission’s calculations, an early benchmarking review will be enough to prevent further rejection from MEPs and member states, and its calculations are probably correct.

However, if the Commission were to go further and reopen the legislation entirely, there would also be risks for Malaysia. A reopening could open the door to a new ‘no’ risk category, which some member states and political groups have been advocating for. Unsurprisingly, they see ‘no’ risk as a natural home for themselves, free from any bureaucracy or oversight whatsoever. Proponents of ‘no’ risk include the EPP – the largest political grouping in the Parliament. If it were introduced, there is a risk Malaysia could find itself two regulatory categories away from the optimal tier, and an even larger compliance burden.

Other factors affecting the outcome include a new “Green Legislative Omnibus” package from the Commission, which builds on the “Sustainability Omnibus” it introduced in February. ‘Omnibuses’ are large-scale regulatory simplification exercises designed to strip out bureaucracy and make the EU more competitive. The Commission published a Call for Evidence on 22 July. The EUDR is currently not in scope, but this is likely to change.

The next few months or two will tell us a lot. While a full legislative reopening remains a long shot, meaningful simplification is seen as a necessity. For Malaysia, it is a moment to lean in, too.

An early review in 2026 could be Malaysia’s best chance to secure fairer treatment under the EUDR.