Background
The EUDR aims to minimise the EU's contribution to global deforestation and forest degradation, which is mainly driven by agricultural expansion, thereby reducing the EU's contribution to greenhouse gas emissions and global biodiversity loss. By preventing certain products from supply chains linked to deforestation and forest degradation from entering or leaving the EU market, the EUDR could reduce EU-driven deforestation and forest degradation, decrease the consumption of products from supply chains linked to deforestation and forest degradation and increase EU demand for and trade in legal and deforestation-free commodities and products.
Does the EUDR apply to you and your products?
This Regulation covers seven commodities – cattle, cocoa, coffee, oil palm, rubber, soya, and wood (the relevant commodities) – whose production has been identified by the European Commission as being responsible for the largest share of EU-driven deforestation. Certain products (the relevant products) are subject to the EUDR if they contain, have been fed with or have been made using any of the relevant commodities. These relevant products include leather, beef, chocolate, rubber tires and coffee – and can be identified by their Combined Nomenclature (CN) tariff classification code.
The scope of products covered by the EUDR is subject to regular review and may expand in the near future to include other commodities and their derived products (e.g., maize and biofuels) which also contribute to deforestation. To comply with the EUDR, the relevant products must have been produced on land that has not been subject to deforestation (or, where relevant, forest degradation) after 31 December 2020.
The EUDR imposes due diligence requirements on operators who, in the course of a commercial activity, place relevant products on the EU market or export them from the EU. In addition, this Regulation also imposes due diligence requirements on traders other than the operator further down the supply chain who, in the course of a commercial activity, make relevant products available on the EU market. As a result, all operators and traders involved in the supply chain of relevant products, regardless of their size, could potentially be affected by this Regulation (although there are less stringent obligations for micro, small and medium-sized operators or traders (SMEs)).
The EUDR applies to both traditional and online marketplaces, ensuring comprehensive coverage regardless of the method of market entry.
What measures should be taken to comply with the EUDR?
Under the EUDR, relevant products may not be placed on, made available on , or exported from the EU market unless they are deforestation-free (i.e., not linked to deforestation or forest degradation after 31 December 2020), have been produced in accordance with the relevant legislation of the country of production and are covered by a due diligence statement, confirming that due diligence has been conducted and that no, or only a negligible risk has been found that the relevant products are not deforestation-free and that they have been produced in accordance with the relevant legislation of the country of production. If these requirements are not met, or if operators and traders are unable to meet these requirements, (unless in case of a negligible risk), relevant products cannot be placed on the EU market, made available on the EU market or exported from the EU. Operators and traders therefore have an important role to play in ensuring that their supply chains comply with the requirements of the EUDR.
Before placing on, making available on, or exporting relevant products from the EU markets, operators and traders are required to exercise due diligence in respect of all relevant products supplied by each particular supplier. This due diligence is exercised by establishing and maintaining a framework of procedures and measures (the due diligence system), which should be reviewed annually and updated whenever operators and traders become aware of any new developments that may affect the due diligence system. The due diligence process consists of the following three steps:
- Collection of information: Collecting relevant information, such as the geolocation of specific plots of land on which the relevant commodities were produced or the relevant products were produced, that demonstrates that the relevant products are deforestation-free and have been produced in accordance with the relevant legislation applicable in the country of production, including local legislation on matters such as land use rights, environmental protection, indigenous peoples' rights, labour rights and human rights.
- Risk assessment measures: Verifying and analysing the information collected and any other relevant documentation. On the basis of that information and documentation, a risk assessment must be carried out to determine whether the products are in compliance with the EUDR.
- Risk mitigation measures: If the risk assessment shows that there is more than a negligible risk that the relevant products are non-compliant, risk mitigation procedures and measures to achieve no risk or only a negligible risk must be put in place before placing the relevant products on the market or exporting them. Such measures could include obtaining more information and documentation or carrying out third party audits. The particular risk mitigation measure will depend on the nature of the risk identified and should therefore be customised.
Traders and operators that qualify as SMEs may rely on the due diligence already carried out by the operators or traders who supplied them with the relevant products, provided that they are not aware of any information or substantiated concerns that these products do not comply with the EUDR.
What are other key points to note?
By 30 December 2024, the European Commission will set up an information system, facilitating operators and traders in the registration and processing of due diligence statements as well as enabling operators, traders, competent authorities and the European Commission to exchange information and data. Furthermore, the European Commission will provide access to the wider public to the complete anonymised datasets of this information system.
The EUDR introduces a benchmarking system that ranks countries or parts thereof based on the risk of non-compliance with the EUDR for relevant commodities produced in that country or parts thereof. The risk categories are defined as low, standard, or high. The risk level assigned to a country or a part thereof influences the due diligence requirements for operators and traders, as well as for competent authorities when carrying out inspections and controls. On 29 June 2023, all countries or parts thereof were initially assigned a standard risk level. By 30 December 2024, the European Commission will publish the list of countries or parts thereof that present a low or high risk.
If operators and traders have established that their relevant commodities and products are sourced from countries or parts thereof that have been classified by the European Commission as low risk, they are permitted to conduct a simplified due diligence when placing on, making available on, or exporting relevant products from the EU market. In this situation, operators and traders are exempted from carrying out a risk assessment or implementing risk mitigation measures as part of their due diligence process. However, it remains imperative for operators and traders to carry out a thorough analysis of the complexity of the relevant supply chains. As part of the simplified due diligence, the operator should be able to demonstrate with appropriate documentation that the risk of circumvention of the EUDR or mixing of the relevant products with products of unknown origin or origin in high and standard risk countries and parts thereof is negligible.
How we can help you prepare for the eudr
Loyens & Loeff boasts a team of international and multidisciplinary professionals in the Netherlands, Belgium and Luxembourg. These experts specialise in customs law, international trade, corporate law and governance and understand the intricacies surrounding the EUDR. If you are navigating this regulatory landscape, we are well prepared to guide you through the process of understanding and implementing these new regulatory measures. To help you understand the EUDR and help you prepare for the due diligence requirements, we can assist in the following areas:
- understanding the impact of the EUDR on your business. We keep you informed and up to date on all EUDR developments, with tailored updates on EUDR developments and the future expansion of the scope of relevant commodities and products that are relevant to your business;
- evaluating the impact of the EUDR on your business and assisting in evaluating the relevant supply chains. This includes identifying which of your commodities and products are subject to the EUDR in order to assess the potential impact of the EUDR on your business operations. More specifically, this may involve a review of the country of production and CN tariff classification codes of the relevant commodities, relevant products and precursors. We can report our findings in a number of formats (g., report, memorandum or a visual);
- assisting in achieving customs compliance, this includes determining whether the EUDR is applicable in the customs procedures used by your business and assisting with the data requirements for the customs declarations;
- helping you to identify the data required to exercise due diligence. We also assist with the setup of an information exchange structure to obtain the necessary data and can assist in setting up the framework of procedures for the due diligence system;
- coordinating with the competent authorities and customs authorities on the specific obligations of your business resulting in more certainty in maintaining compliance; and
- supporting you in negotiations with the Public Prosecution Service and/or other investigative bodies to secure favourable out-of-court settlements, as our team includes skilled litigators equipped to provide a robust defence in administrative and criminal enforcement proceedings, when a case is referred to criminal courts or supervisory bodies.
We have prepared a fact sheet so that you can see the key points to note at a glance. Please download our PDF document. Should you have any questions about the EUDR, please feel free to contact us.
