The European Union is preparing to ease the burden of its landmark anti-deforestation law by exempting small farmers and foresters from some of its most stringent reporting requirements. The move, confirmed by multiple EU officials involved in negotiations, marks a major adjustment to one of the bloc’s most ambitious green policies — and comes as the law faces mounting resistance both within Europe and abroad.
Under the revised proposal, micro and small producers will no longer have to register every product they sell under the new deforestation tracking system. Instead, they will only need to register once in the EU’s central IT platform, which monitors the origins of goods such as palm oil, rubber, cocoa, soy, and cattle. The exemption is designed to reduce administrative pressure on smallholders who often lack the resources or technical capacity to navigate the EU’s complex digital compliance process.
Officials told the Financial Times the adjustment aims to strike a balance between protecting forests and maintaining fair market access for smaller agricultural producers — many of whom operate on thin margins and are vital to rural economies both inside and outside the EU. “The system must be effective but also workable for small operators,” one EU official said. The Commission is expected to formally approve the revised exemption during a meeting on Tuesday.
Environment Commissioner Jessika Roswall has acknowledged that the IT platform underpinning the law has come under “huge pressure,” making a full rollout difficult. The regulation, initially due to come into force this year, was first postponed to January 2026 and is now expected to be delayed again until 2027. Penalties for non-compliance would begin six months after the law eventually takes effect.
At today's🇪🇺#EUCO summit, national leaders are discussing ways to scrap EU climate legislation adopted in 2019-2024 term
🇩🇪Merz wants to kill the 2035 petrol car phase-out. And he's pushing to scrap corporate sustainability reporting, as promised to Trump https://t.co/C7Ljf9l92j pic.twitter.com/L5PFPt2Vrr
— Dave Keating (@DaveKeating) October 23, 2025
Mounting International Pressure
The law, officially known as the EU Deforestation Regulation (EUDR), prohibits the import of products linked to deforested land unless producers can prove their goods are deforestation-free. While Brussels has presented it as a cornerstone of the EU’s climate agenda, the measure has sparked sharp opposition from key trading partners — and now, from Washington.
The Trump administration has joined earlier objections raised under President Biden, calling the EUDR discriminatory and disruptive to global supply chains. A senior EU member state source suggested that recent delays could be due to renewed U.S. pressure, not just technical issues.
Tensions with Malaysia and Indonesia
Indonesia and Malaysia, major exporters of palm oil, have long argued that the law unfairly penalizes them through heavy reporting demands and risk classifications. Malaysia, which has been labeled a “standard risk” country compared to the U.S.’s “low risk” status, has criticized what it sees as double standards. This especially given the fact that national deforestation fell by 13 percent last year — progress recognized by NGOs — yet their exports still face tighter scrutiny.
Malaysia lost just 0.56% of its remaining primary forest in 2024, according to Global Forest Watch. That is less than Sweden’s 0.87% loss. Sweden holds the largest share of ‘old growth’ forest in Europe, with 70% of its landmass still forested, yet it is clearing these ancient woodlands at a faster pace than the Amazon rainforest. Despite this, Sweden automatically qualifies for “low risk” status by virtue of being an EU member.
MSPO began as a voluntary scheme in Malaysia, the world’s second-largest palm oil exporter, and became mandatory in January 2020, with independent third-party audits ensuring compliance. According to the certification body, MSPO “gives buyers and regulators the confidence that certified palm oil is legally sourced and deforestation-free,” while its digital tracking system “enables full supply chain visibility and strengthens trust among global stakeholders.”
In an attempt to ease tensions, the EU recently agreed to recognize the Malaysian Sustainable Palm Oil (MSPO) certification as a credible standard for demonstrating compliance with the deforestation law. The MSPO certification body said its system gives buyers and regulators confidence that certified palm oil is legally sourced and deforestation-free, adding that its digital tracking system ensures full supply chain visibility and builds trust among global stakeholders. It also mentioned that MSPO gives buyers and regulators the confidence that certified palm oil is legally sourced and deforestation-free, adding that its digital tracking system enables full supply chain visibility and strengthens trust among global stakeholders, Reuters reports.
Malaysia, the world’s second-largest producer of palm oil 24% of total world production as of June 2025), has made significant strides in sustainability — with nearly 90% of planted areas certified under MSPO.
Yet, smallholders still face challenges in meeting certification… pic.twitter.com/3LhPxlmiLU
— Council of Palm Oil Producing Countries (@CPOPC_NET) September 16, 2025
Broader Green Policy Reassessment
The deforestation law’s revision forms part of a wider recalibration of EU environmental legislation under Commission President Ursula von der Leyen. In a letter to EU leaders this week, von der Leyen signaled further flexibility on other high-profile measures, including the bloc’s 2035 ban on combustion engine cars and its carbon pricing scheme for housing and transport.