EU Deforestation Regulation

Navigating the EU Deforestation Regulation: A Call to Action

Executive Summary

The EU Deforestation Regulation, in effect since June 2023, places new obligations on industries to combat deforestation. As enforcement looms at the end of 2024, it's imperative for ship suppliers to grasp their obligations as "Operators," importers, or traders. Despite opposition, the EU Commission hasn't altered the regulation, but adjustments might be on the horizon, potentially delaying enforcement. Businesses must stay informed and proactive to ensure compliance.

Introduction

The EU Deforestation Regulation (Regulation (EU) 2023/1115) stands as a pivotal step in the global fight against deforestation and forest degradation. With its implications reaching various industries, including ship suppliers, understanding its nuances and obligations is paramount. This blog aims to delve into the regulation's background, its potential impact on importing and exporting companies, and actionable recommendations for compliance.

Background

Enacted in June 2023, the EU Deforestation Regulation seeks to address the pressing issue of global deforestation by regulating the import of products linked to deforestation and forest degradation. Notably, it targets industries whose products contribute to these environmental concerns.

Understanding the EU Deforestation Regulation

The EUDR, operational from June 2023, aims to combat deforestation and forest degradation by regulating the importation and consumption of specific commodities. Similar to the EU Carbon Border Adjustment Mechanism (CBAM), it aligns with global sustainability goals, necessitating stringent compliance measures.

Scope of In-Scope Commodities

Covered commodities include cattle, wood, cocoa, soy, palm oil, coffee, and rubber, along with derivatives like leather, chocolate, tyres, and furniture. Compliance entails rigorous due diligence to ensure goods originate from non-deforested or degraded land, extending to intra-EU trade and exports.

Importer Compliance Requirements

EU importers must furnish comprehensive due diligence statements for each shipment, accompanied by risk assessments and evidence of mitigation measures. Supply chain transparency and cooperation are vital, with penalties for non-compliance ranging up to 4% of EU annual turnover.

Main Points & More Detail

Wide Product Coverage: The regulation encompasses a broad range of products, from cattle to books, along with derivatives of seven commodities including cocoa, coffee, and soya. Careful assessment of product classification under the Combined Nomenclature is essential.
Market Access Requirements: Non-compliance with the regulation from December 30, 2024 (June 30, 2025, for micro or small businesses) restricts market access to the EU. Products must be "deforestation-free," comply with local legislation, and have a due diligence statement indicating minimal risk of non-compliance.
Legal Deforestation Inclusion: Unlike previous regulations, the EU Deforestation Regulation covers legal deforestation and forest degradation as per the laws of the country of production, aiming to tackle a significant portion of commercial agriculture-driven deforestation.
Local Laws Compliance: Products must adhere to local laws concerning land use, environmental protection, forest management, labor and human rights, and more. This ensures responsible sourcing and production practices.
Impact on Current Production: Today's production shapes future compliance. Items entering the EU market from December 30, 2024, must not originate from deforested or degraded land since December 31, 2020, emphasizing the importance of current practices.
Company Responsibility: Companies placing products on the EU market assume primary responsibility for compliance. Due diligence statements uploaded to the competent national authority affirm compliance and transparency in the supply chain.
Prescribed Due Diligence: Due diligence involves collecting detailed information, risk assessment, and mitigation strategies. Transparency and information sharing along the supply chain are crucial for compliance.
National Authority Oversight: Competent national authorities will conduct regular checks on operators and traders to ensure compliance. Immediate remedial action may be required for high-risk products, emphasizing the need for ongoing diligence.
Scrutiny by Private Parties: Private parties can submit concerns regarding non-compliance to operators and competent authorities. Administrative or judicial procedures are available to review legality under the regulation.
Penalties for Non-Compliance: Penalties for breaches include fines up to 4% of EU turnover, confiscation of products or revenues, exclusion from public funding or contracts, and temporary prohibition from dealing in relevant items. Compliance is essential to avoid severe repercussions.

Conclusions

Recommendations

By adopting proactive compliance measures and leveraging strategic partnerships, customs professionals can navigate the complexities of EUDR while optimizing operational efficiencies and minimizing compliance risks.

Prioritize comprehensive due diligence and risk assessment for all in-scope goods.
Foster transparent supplier relationships to ensure compliance and mitigate risks effectively.
Stay informed about regulatory updates and guidance, leveraging resources from Customs Manager Ltd. Start by leaving your e-mail at www.customsmanager.org
Enhance internal compliance capabilities through specialized training offered by Customs Manager Ltd. See www.customsmanager.org/events
Book a free expert consultation via www.customsmanager.org to address specific compliance queries and optimize strategies.

For any questions or assistance, contact Arne Mielken at +447914650183 or info@customsmanager.org.

Conclusion

Adapting to EUDR requirements is paramount for businesses trading in covered commodities. Compliance necessitates a holistic approach, emphasizing supply chain transparency and proactive risk management strategies. The EU Deforestation Regulation presents significant challenges to businesses affected. As enforcement draws nearer and potential adjustments loom, staying informed and proactive is non-negotiable. Compliance isn't just about adhering to regulations; it's about contributing to environmental sustainability and ethical business practices.

Actionable Recommendations

Conduct a thorough assessment to determine if your products fall within the scope of the EU Deforestation Regulation.
Familiarize yourself with the obligations associated with your role as an "Operator," importer, or trader under the regulation.
Stay updated on regulatory developments and industry insights to adapt swiftly to potential changes.
Provide comprehensive training for your team to understand and implement necessary changes effectively.
Collaborate with industry associations and regulatory bodies to navigate compliance challenges and leverage resources for sustainable practices.