What is the EU Deforestation regulation (EUDR)?
Similar to the Carbon Border Adjustment Mechanism (CBAM), the EU Deforestation Regulation (EUDR) is designed to reduce the environmental impact of those products which originate from and/or are produced outside the European Union. The EUDR is replacing the EU Timber Regulation (EUTR) from December 2024.
This is done by placing forestry standards on your goods which are imported, disqualifying your suppliers who do not reach them. Similarly, you must also prove that your cargo has not contributed to forest degradation if you are exporting from the EU.
The commodities which are affected include beef, cocoa, coffee, rubber, soy, and timber, as some of the main culprits associated with deforestation. Also included are derivatives of these products, such as some processed meats, leather, chocolate, soybeans, paper, and printed books.
Note that this list is not exhaustive, and any EU green supply chain initiatives already in place for some of these products may still be applied in conjunction with EUDR – such as the Forest Law Enforcement Government and Trade (FLEGT) licence for paper from certain sources.
What’s required of your suppliers under the EU Deforestation Regulation (EUDR)?
One of the main concepts of EUDR is precise supply chain mapping. You must be able to show exactly where the timber products in your shipment have originated from by using coordinates. This land must not have been deforested after 2020.
In addition to deforestation regulations, EUDR requires that suppliers adhere to standards regarding welfare, biodiversity protection, anti-corruption, and other rights set out in the UN Declaration on the Rights of Indigenous People.
Additionally, the EU Deforestation Regulation requires that any deforestation complies with the legal standards for the country of origin. This part of the EUDR cites a report from the Forest Policy Trade and Finance Initiative, which estimated that only around 30% of commercial deforestation was legal between 2013 and 2019.
What are your obligations and risks as an EU trader?
Despite the onus being on your suppliers to produce and report accordingly to the EU Deforestation Regulation’s standards, you are responsible for putting your goods on the EU market.
Therefore, you must carry out your due diligence on suppliers and provide a statement to your national authority which confirms you have completed this.
Your due diligence should include:
- Collecting detailed information which confirms your products are compliant.
- A risk assessment for each product.
- Risk mitigation, including independent surveys and working with suppliers on improvements.
If your supplier cannot meet the requirements for EUDR, then you will need to source an alternative who does.
As the one responsible for bringing the goods to the EU market, the importer will need to issue a statement as proof of the conducted due diligence for each import shipment, and to pass on the reference number of the statement to any other downstream operators in their supply chain. A similar statement is needed if EUDR goods are exported from EU.
You can expect compliance checks from the national authority for your member state, who may inspect you without warning and require immediate remedial action if you are found to be noncompliant.
Additionally, noncompliance may lead to:
- Confiscation of goods.
- Temporary exclusion from public procurement and funding.
- Temporary prohibition from trading EUDR goods.
- Higher requirements for due diligence reporting.
- Fines of up to 4% of your previous year’s EU turnover.
Need advice on the EU Deforestation Regulation?
Customs Support is here for you. Strategically located in more than 100 offices across the European Union, we can work with you and your local authorities to prepare you for the EU Deforestation Regulation. Contact us for more information.
