February 9, 2024

EU Deforestation Regulation (EUDR)

Client Advisory: EU Deforestation Regulation (EUDR),

The European Parliament have enacted a new law called the EU Deforestation Regulation (EUDR), (EU) 2023/1115 aimed at fighting climate change and biodiversity preservation. Effective December 30, 2024, and replacing the existing EU Timber Regulation, the EUDR places a ban on the import of products that are linked to deforestation and forest degradation.

The regulation will be applicable to products and commodities produced on or after June 29, 2023, except timber products produced before the aforementioned date, which must be placed on the EU market before December 31, 2027. Goods produced entirely from end of lifecycle material, which would otherwise be discarded, are excluded. The new regulation is designed to protect forests which cover land spanning over 0.5 hectares, with mature trees higher than 5 meters, and a canopy cover of more than 10%. 

The legislation is directed at companies, or their authorized representatives, that place relevant products onto the market. This is another piece of legislation that could affect Crane Worldwide when acting under Indirect Representation or providing fulfilment services for a non-established client since it is possible that Crane Worldwide would be regarded as the EU representative.

Any Importers/Exporters who may be affected by this piece of legislation must be made aware, since the failure to comply will result in costly penalties. 

What is the requirement?

It will be prohibited to place a relevant commodity or relevant product onto the EU market if the product or one of its ingredients derive from a product that comes from arable land that has been deforested after December 31, 2020. Therefore, unless the following conditions have been met, the traders will not be permitted to bring any of the products or commodities into free circulation:

  • They are deforestation free,
  • Produced in accordance with the relevant legislation of the country of production; and
  • Covered by a due diligence statement Please refer to example from (EU) 2023/1115 Annex II here

The expectation of the importer or representative is to exercise due diligence and submit a due diligence statement prior to placing one of the products onto the market. This means a product cannot be imported into free circulation if it is non-compliant, is a non-compliance risk, or the client is unable to fulfil the conditions.

Importers of such products are then given 18 to 24 months (depending on the size of the company) to take remedial actions to meet the compliance requirements. 

Importers or their representative will be expected to retain records of the products imported as follows:

  • Submit a due diligence statement, which will be required from December 30, 2024.
  • A derogation is in place for Small and Medium-Sized Enterprises (SMEs) that trade relevant products or commodities that have already been subjected to due diligence, a reference must be made to previous statements.
  • Collecting detailed information that demonstrates the products comply with the EUDR.
  • Carrying out a risk assessment in relation to each product to ascertain the risk of non-compliance with the EUDR. This will reflect numerous factors including the risk category of the country of production ('high risk', 'standard risk', or 'low risk', to be set out by the European Commission); and
  • Mitigating risks by carrying out independent surveys/ audits, gathering additional documentation, or working with suppliers (particularly SMEs) through capacity building and investment

NOTE: Member states have an obligation to police the regulation, therefore, it is likely that regular checks will be conducted. Expect authority holds and checks to take place without warning.

Penalties for non-compliance:

  • Penalties of up to 4% of the importers or representative’s annual turnover in the EU country,
  • Products will be refused entry and confiscated,
  • The business will be excluded from public tenders,
  • For serious or repeat offences then the trader could be prohibited from trading affected items within the EU

What products will be affected by EUDR?

The commodities listed below are regarded as the “relevant commodities & Products-Refer to EU2023/1115 Annex I”:

  • Cattle
  • Cocoa
  • Coffee
  • Oil palm
  • Rubber
  • Soya
  • Wood

This Regulation does not apply to goods if they are produced entirely from material that has completed its lifecycle and would otherwise have been discarded as waste.

How does EUDR impact you?

  • Importers/Exporters must be aware of the risk associated with EU authorities requesting origin of goods. 

Global Trade Compliance will continue to monitor the situation and provide updates as soon as they become available. For more information, please contact GTC: globaltradecompliance@craneww.com

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