The proposal was voted down with 370 votes against 264 on Tuesday, which means that the entire proposal is now likely to be withdrawn.
Swedish member Emma Wiesner (C) says she has "mixed feelings" after initially being sharply critical, but then driven to change the proposal in a way that would suit Sweden.
"This would have been a good opportunity to once and for all ensure that Sweden had more to say about the forest. By voting no to the proposal, we are now not taking that chance", comments Wiesner via SMS to TT.