There are many reasons for the exacerbated global climate crisis. One of them is deforestation and forest degradation. To combat this, the European Union has introduced a regulation, Regulation 2023/1115, on the trade in goods and products related to deforestation and forest degradation. Check what obligations importers and manufacturers have in relation to EUDR 2023/1115.
EUDR 2024 – what do you need to know as a business
Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation involves a wide array of goods, and relevant businesses must comply with the new law.
Products covered by the EUDR
Regulation 2023/1115 covers goods such as:
- cattle
- cocoa
- coffee
- oil palm
- rubber
- soya
- wood
- products that contain, have been fed with or have been made using relevant commodities.
The full list of goods covered by EUDR 2023/1155 is available in Annex I to the Regulation. Goods are identified by their CN code. If your product is made of one of the goods or materials listed in Annex I and it falls under one of the listed HS customs codes, you must comply with the EUDR requirements.
Why were these product groups chosen? The preamble provides hard data: without appropriate regulatory intervention, the Union’s consumption and production of six commodities (cattle, cocoa, coffee, oil palm, soya, and wood) alone would rise to approximately 248,000 hectares of deforestation annually by 2030.
EU regulation prohibits deforestation
According to Article 3 of the EUDR, it is prohibited to place on the market, make available on the market, or export products (relevant commodities and products) such as soy, wood, rubber, coffee, cocoa, oil palm, cattle, and certain derivatives thereof, unless they meet all of the following conditions:
- they are deforestation-free
- they have been produced in accordance with the relevant legislation of the country of production; and
- they are covered by a due diligence statement.
Who is subject to the EUDR?
Many economic operators in the supply chain of the relevant commodities and products will be subject to the EUDR. If you import, export, manufacture, use relevant commodities and products, or just make the goods available on the market (e.g. store chain), you must comply with certain obligations.
Obligations of entrepreneurs regarding EUDR 2023/1115
Economic operators in the supply chain of relevant commodities and products, such as importers, manufacturers, exporters, chain stores, must introduce and maintain a so-called due diligence system. How can they do this?
1. Determination of the country of origin of the goods. Due diligence obligations vary depending on the level of deforestation and degradation risk for a given country of origin. Verification of the legality of obtaining/producing these products is also crucial.
2. Determination of the level of risk in accordance with Article 10. Operators must document and review the risk assessment at least once a year.
3. If the level of risk is higher than negligible, entities must take action to reduce it. This may consist of conducting independent audits and studies.
4. If the relevant communities/products comply with the provisions of the EUDR, operators must submit a due diligence statement.
Operators who do not fall within the categories of SMEs, such as microenterprises, or natural persons must on an annual basis, publicly report (via the Internet etc.), on their due diligence system.
Penalties for not submitting an EUDR declaration
Without a due diligence statement:
- the products may be confiscated at the border and
- operator or exporter can get a fine of up to 4% of their total annual Union-wide turnover in the financial year preceding the fining decision.
The checks will cover at least 9% of entities in the supply chain that place on the market, make available on the market or export from its relevant products that contain relevant goods or products manufactured using such relevant goods, originating from high-risk areas.
EUDR date of application
EUDR will be applied to:
- operators with the status of large and medium-sized undertakings from 30 December 2024
- operators with the status of micro-undertakings or small undertakings from 30 June 2025.
EUDR and sourcing – a summary
EUDR is the European Union’s response to the problem of deforestation, and the main objective of the regulation is to reduce deforestation related to imports into the EU and production within the EU. Various operators and traders that deal with relevant EUDR commodities and products covered must comply with the regulations and, among other things, submit a due diligence statement. If not, they may be fined and get the products confiscated.
Thanks to the EU producers, importers and exporters efforts, it is possible to minimize the negative impact of trade on biodiversity and enforce sustainable forest management.
Do you import products to the European Union or manufacture products in the EU? Check what obligations apply to you depending on the product group.