EUDR is part of the broader EU strategy to protect the world’s forests and limit carbon emissions.
EUDR will create mandatory due diligence requirements for EU businesses, expanding upon the scope of EU Timber Regulations (EUTR) and in time replacing it. The key difference is that the EUDR will affect more commodities and will require legal commitment from an Operator that the supply chain is ‘deforestation free’ and not just sourced legally.
EUDR regulation will affect seven specific commodities: soy, cattle, palm oil, timber, cocoa, coffee, and rubber. Subject to adjustment.
Defining a Product
The new Regulation will require companies importing or exporting the impacted commodities from the EU to prove the products are deforestation-free. This is defined the same way as in the EUTR – ‘the product itself, its ingredients or its derivatives were not produced on land subject to deforestation or forest degradation’.
Operators and Traders
Operators (companies who first place products in the single market) will be required to implement the due diligence requirement on their supply chains to ensure they are deforestation and forest-degradation-free, while traders will be responsible for storing and sharing information on their supply chain to operators.
Country Benchmark System
The European Commission (EC) will conduct risk assessments by country. The EC will classify countries as no, low, standard and high risk. For products from low-risk countries, a simplified due diligence process is expected to be applied, which includes an exemption from risk analysis and mitigation measures.
Fees & Penalties
Potential sanctions include:
Fines – Proportional to environmental damage, the value of the product, and turnover (max 4%).
Confiscation – of the relevant product and operator’s/trader’s revenue from relevant products.
Temporary exclusion – from public procurement tender procedures (for up to 12 months). A temporary ban on the placing on the EU market or export of the product.
Suspension – from the use of the simplified due diligence procedure.
