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US paper makers are warning the European Union that a new law requiring them to trace timber to its origins risks disrupting $3.5 billion of trade and raising prices for diapers, sanitary pads and other hygiene products.<\/p>\n
It will be impossible to comply with the pending\u00a0EU Deforestation Regulation<\/a>\u00a0because pulp supply chains are too diffuse to track all trees, and there\u2019s often a two-year lag between the time they\u2019re cut down and when they\u2019re turned into fiber, according to the American Forest and Paper Association.<\/p>\n The US industry is a major exporter of \u201cfluff pulp,\u201d an absorbent material used by the likes of Procter & Gamble Co. and Kimberly-Clark Corp. to make personal products. American suppliers meet about 60% of the EU\u2019s needs, so any interruption would reverberate throughout the 27-nation bloc.<\/p>\n \u201cThe EUDR as is currently written will raise the costs significantly for US producers, and it will translate into inflationary pressures in the EU,\u201d said Mark Pitts, executive director at the paper association. \u201cIs this really necessary?\u201d<\/p>\n His group wants the law\u2019s implementation, scheduled for year\u2019s end, delayed while it pushes for the sector to be categorized as a low risk to global deforestation. That would exempt producers from the traceability requirement.<\/p>\n US government officials also asked for a postponement, saying in a letter to the EU that the rule posed\u00a0\u201ccritical challenges\u201d<\/a>\u00a0to domestic producers.<\/p>\n The EU aims to slash the 10% of global deforestation \u2014 and associated loss of biodiversity \u2014 linked to its consumption of commodities such as timber, beef, coffee and cocoa. The pending law requires every log, cow and bean entering the region to be traced to their origins, or the bloc will levy hefty penalties.<\/p>\n \u201cThe EUDR mandates that companies document the geolocation of all relevant plots of land for commodities traded in bulk,\u201d said Adalbert Jahnz, a spokesman for the European Commission. \u201cThis requirement is not about tracing each individual wood fiber to a single plot.\u201d<\/p>\n Pampers maker Procter & Gamble and Huggies manufacturer Kimberly-Clark are the top suppliers of diapers in Europe, while P&G is the biggest supplier of menstrual care products, according to data from Euromonitor International.<\/p>\n A spokesperson for P&G said the company complies with applicable laws and regulations, and it will do so with the EUDR. It also expects suppliers to do the same through its\u00a0sourcing<\/a>\u00a0guidelines.<\/p>\n Kimberly-Clark declined to comment.<\/p>\n There have been some repercussions from the law even before it takes effect, with several association members having supply agreements derailed, Pitts said.<\/p>\n \u201cIt\u2019s already affecting supply-chain contracts for the fall,\u201d he said, declining to identify the companies involved. \u201cIt puts those contracts in jeopardy.\u201d<\/p>\n<\/div>\n