Deforestation Regulation

Introduction

Regulation (EU) 2023/1115 (EUDR) is a landmark legislation aimed at minimising the European Union's contribution to global deforestation and forest degradation. It replaces the EU Timber Regulation (Regulation (EU) No 995/2010) and significantly expands the scope of commodities and products covered. The Regulation mandates that specific commodities and products derived from them can only be placed on the Union market or exported if they are deforestation-free, legally produced according to the relevant legislation of the country of production, and covered by a due diligence statement.

Main Goal

The primary objectives are to reduce the EU's impact on global deforestation and forest degradation, thereby reducing greenhouse gas emissions and global biodiversity loss. It establishes a mandatory due diligence framework for operators and traders.

Who It Applies To

The Regulation applies to Operators and Traders who place relevant products on the EU market or export them from the EU.

• Operators: Natural or legal persons who first place the product on the market or export it.
• Traders: Persons in the supply chain other than operators who make products available on the market (SME traders have lighter obligations; non-SME traders have obligations similar to operators).

Affected Products and Commodities

The Regulation covers seven specific commodities and derived products listed in Annex I:

• Cattle (meat, leather, offal)
• Cocoa (beans, paste, butter, powder, chocolate)
• Coffee (roasted, decaffeinated, husks)
• Oil Palm (nuts, kernels, oil, palmitic acid, glycerol)
• Rubber (natural rubber, tyres, apparel, hard rubber)
• Soya (beans, flour, meal, oil)
• Wood (logs, sawn wood, plywood, paper, printed materials, furniture, charcoal)

Key Provisions and Obligations

1. Deforestation-Free Requirement: Products must be produced on land that has not been subject to deforestation after the cut-off date of 31 December 2020.
2. Legality: Production must comply with the relevant legislation of the country of production (land use, environmental, labour rights, human rights, third-party rights, and FPIC).
3. Due Diligence Statement (DDS): Operators must submit a DDS via a dedicated information system prior to placing products on the market, accepting responsibility for compliance.
4. Geolocation: Operators must collect geographic coordinates (latitude/longitude) of the specific plots of land where the commodities were produced. For plots over 4 hectares, polygons are required.
5. Risk Assessment & Mitigation: Operators must verify information, assess non-compliance risk, and implement mitigation measures (e.g., audits, additional data) unless the risk is negligible.

Exemptions and Simplifications

• Simplified Due Diligence: Available for products originating from countries or parts thereof classified as 'low risk' by the Commission.
• SMEs: Micro and small enterprises have a longer transition period and simplified administrative requirements (though they must still ensure compliance).

Penalties

Penalties are determined by Member States but must be effective, proportionate, and dissuasive. They include:

• Fines: Maximum of at least 4% of the operator's/trader's total annual Union-wide turnover.
• Confiscation: Of the relevant products or revenues gained.
• Exclusion: Temporary exclusion from public procurement and access to public funding (up to 12 months).
• Prohibition: Temporary ban on placing products on the market.