If the European Commission is taken seriously, the EUDR will be postponed to 30 June 2026 (30 December 2025 for micro and small enterprises). This delay will give businesses more time to prepare.
The Commission announced both a guidance documentThere are many series. New FAQThe purpose of this document is to provide clarification on certain issues surrounding the law.
We have tried to summarize the most important new questions and answers that have been added to the FAQs.
How important is traceability?
To ensure that there has been no deforestation, it is important to be able to trace the exact plot where a certain commodity (harvested and born) was produced. Geographic coordinates will be required.
The regulation is based on geolocation data. Products or goods that are not included in the due diligence declaration (DDS), or that do not have contact details, cannot be sold or imported into the EU.
Traceability is required for each batch of relevant products or goods imported, traded or exported. Bulk goods must be traceable to each parcel of land. In a composite product, the same principle applies. In a composite product, which contains several raw materials and products relevant to the business, an operator is only required to carry out due diligence for the raw material and its derived products. If a chocolate bar contains cocoa, palm oil and cocoa, the operator only needs to carry out due diligence for the cocoa and cocoa butter, since cocoa is the commodity.
Polygons are required for plots larger than 4 hectares and for commodities other than livestock. The size of the plot can be between 4 and 20 hectares, provided that the conditions within each plot are fairly homogeneous.
An implementing law will establish the rules for reporting polygons in digital form. These will continue to evolve over time.
To be compliant, non-SME operators and traders must collect information on the dates and times of production of a good.
The merchandise will still be compliant if the plot from which the merchandise comes is located on the same property as the plot where the deforestation took place.
If, for example, the farmer obtains cocoa from a plot of land that has not been deforested, but the property also contains a plot where deforestation of land to grow coffee has taken place, the cocoa is considered compliant.
If the area where the product is produced (the property) is in violation of local law, the item is non-compliant.
Operators may, in limited circumstances, provide geolocation coordinates of parcels higher than those where the bulk commodity was produced. This is only possible when the bulk commodity has not been mixed with other non-compliant products or with goods that cannot be traced. Operators may declare “in excess” if the bulk commodity has been mixed during the production or logistics process. The operator is responsible for the DDS and all parcels linked to it.
The traceability requirement must be respected. A product that does not have geolocation information will still be in violation of the EUDR, even if it is manufactured in a country where the government has prohibited the sharing of this data with traders and operators.
If the third country agrees, EU authorities can carry out on-site audits in that country.
The FAQ states that the system will be launched in mid-December 2024. However, it is unclear whether there is a delay in the EUDR. Geolocation data can be downloaded manually or in a format (the system supports GeoJSON).
Definitions
This FAQ clarifies important terms, such as:
- Deforestation – Deforestation falls within the scope of this regulation. It is the act of clearing a forest to make way for agriculture. The regulation excludes any use other than agriculture, such as building a road. The definition of “agricultural uses” includes rubber growing. The regulation only prohibits the felling of trees if they are part of an existing forest.
- Forest degradation Under the EUDR, forest degradation is defined as structural changes in forest cover. For example, the transformation of primary forests, which naturally regenerate, into plantations or other forests, or the transformation of primary forests into planted trees. Operators must ensure that they have not caused these situations after 31 December 2020. Operators are responsible for forest degradation that occurs after 31 December 2020, even if they were not aware of it during the due diligence. They are responsible for ensuring that no forest degradation has occurred. Operators are not responsible for events occurring after the submission of the DDS.
- Forest degradation can be prevented by avoiding the use of chemicals. If the product is not deforestation-free, it must be harvested in a way that does not cause forest degradation. This applies to wood products. The regulation does not cover any other types of forest degradation, such as forest fires or disease outbreaks. If forest degradation is caused by these factors and not by human intervention, then planting trees or seeding them for forest regeneration would not constitute the creation of a “planted forest” or a “plantation forest”.
- Trees that can reach these thresholds on site – According to FAO, young trees expected to grow to five metres or more, or with a crown density of at least 10 %, can be part of a forest area, as can temporary non-forested areas that remain primarily forest.
What are the limits of the regulation?
This regulation distinguishes between parties who export or place the relevant products on the market and those further down the supply chain. A product manufactured in the EU and then transferred to another person who places it on sale is considered to be supplied.
Once a product is placed on the market, it is then supplied to distributors. Operators are subject to the regulation when they place a product listed in Annex 1 of the EUDR on the market. Operators may use the products or processes concerned in their activities, but they only fall within the scope of this regulation if they supply the market.
If the empty packaging containing the product is returned to the manufacturer by the retailer, as long as the packaging is not used as a carrier for another product but is sold or offered on the market as a stand-alone product, then it must meet the due diligence requirements. The EUDR does not cover second-hand goods that are otherwise disposed of as waste.
The EUDR requires that a company only conduct due diligence for products listed in Annex 1 of the EUDR. Due diligence only applies to the most recent affected product, not to all of them.
What are the obligations of operators and traders?
In the event of a breach of the regulations, SME operators "further down the supply chain" (i.e. those who transform a listed product into another Annex I product or export the product in question) will be held legally liable.
However, they are not required to upload a DDS into the system, nor to perform due diligence on parts of products that have already been subject to due diligence. Upon request from the authorities, they must provide due diligence references for previous stages of the supply chain.
The upstream operator will decide whether downstream operators can access its geolocation information.
A person based in the EU who places EU-relevant products must have an EORI number. They will have access to the information system as an operator.
It is the responsibility of the authorities to ensure that the integrity and accuracy of the system is verified.
Retailers can be traders or operators depending on whether they sell a product or a commodity.
Directive 2013/34/EU amended the size of SMEs in 2013. This Directive is only applicable to countries that have transposed the Directive into their national law. The adjusted size of SMEs will therefore only be applied in these countries and only for companies that have been established in the EU following the implementation of these laws in these Member States.
The responsibility of all operators for the products they place on the market, as well as the responsibility of non-SME resellers for the products they sell on the market. Information must be communicated throughout the supply chain by all operators, including non-SME traders. It does not matter whether a company is part of a group or not.
The exemptions from the regulation apply to products manufactured before 29 June 2023 (or, in the case of bovine animals, at birth) and before the date of entry into force. The operator is responsible for proving this. Products placed on the markets during the transitional phase are also exempt, but the competent authorities can control them and it is the responsibility of the operators to prove this. The transitional period is 30 days from the date of entry into force of the law. The effective date is June 20, 2023.
Evidence is required to prove that the product entered the market before the new regulation came into force. A customs declaration will be sufficient for imported goods. Documentation relating to the production of products in the EU can be provided.
If all necessary evidence is provided, it is possible to mix products that are exempt from the DDS because they were placed on the market during the transition period. A DDS is only required for products that are newly placed on the market.
What is the minimum level of due diligence required?
Operators must retain their due diligence data for at least five years after organizing and collecting it. Products must perform due diligence by looking back to the cut-off date of December 31, 2020 to determine whether the land was a forest during that period. For products made with materials outside the scope of this regulation, no documentation is required.
The EUDR is a standard template that can be used for any product. However, there are no predefined questions to ask during the due diligence process. Operators and traders who submit a DDS are required to register in the system.
The DDS can cover multiple shipments or even multiple batches. As long as due diligence has been carried out on each product, it is acceptable. However, operators are required to review their due diligence system once a year. Where products are manufactured within the EU, the date on a DDS should reflect the first time the product was physically available for sale.
Satellite imagery is useful in determining whether deforestation has occurred or not, but regulations do not require its use to comply with the rules.
Customs clearance is required for products manufactured outside the EU. In this case, a simple customs declaration will suffice.
Non-SME operators are required to produce an annual report on their activities after the first year of application of the EUDR. However, companies that have already reported activities under the EUDR in response to another EU law (such as the CSDDD), do not need to submit this information again.
Failure to comply will result in penalties.
EU states are responsible for defining the penalty framework and can do so at their discretion. The fine cannot be less than 4 % of the trader or operator's EU-wide revenue in the year preceding the fine. The FAQ states that the fine should be increased if necessary and should "effectively deprive the responsible parties of the economic benefits they have derived from the infringements".
In the case of the Public Procurement Directive, it is not up to the Member States to decide whether they want to implement self-cleaning.
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