EUDR: When will it take effect, who will be affected and how to prepare for the new obligations?

At its session on 14 November 2024, the European Parliament voted on an amendment proposed by the European Commission to 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 and repealing Regulation (EU) No 995/2010 (the “Regulation” or “EUDR”). The amendment postpones the application date of the obligations under the act by 12 months. As a result, the Regulation will apply to most entrepreneurs starting 30 December 2025, and to entities that were established as micro or small enterprises by 31 December 2020 – starting 30 June 2026.

In proposing a postponement of the EUDR enforcement, the European Commission noted that this move responds to numerous requests from member states, third countries and businesses seeking additional time to prepare for the Regulation’s implementation.

In addition to the postponement, the European Parliament also voted on further amendments, including the introduction of a “risk-free” category for countries of origin where there is no risk of deforestation. Countries in this category will be subject to reduced obligations and less frequent inspections.

Concerns about the difficulty of adjusting operations by the original deadline (i.e., 30 December 2024, with 30 June 2025, for micro and small enterprises) are justified. To ensure compliance with the new regulations, entities involved in the marketing of products covered by the EUDR must conduct comprehensive audits of their operations, establish appropriate procedures and create the necessary documentation. The obligations under the Regulation will have a significant impact on the entire production and distribution chain, both within the EU and in the global exchange of goods. Therefore, even with the additional 12 months to ensure compliance with the EUDR, it is advisable to start taking steps now to align your business with the new requirements.

As a quick reminder, here is a summary of the key facts about the EUDR.

What is the purpose of the EUDR?

The purpose of the EUDR is to minimize the European Union’s impact on global deforestation and forest degradation and reduce the Union’s contribution to greenhouse gas emissions and global biodiversity loss.

Commodities and products covered by the EUDR will only be allowed to be placed, made available on or exported from the EU market if they meet all of the following conditions:

1) are deforestation-free;

2) have been produced in accordance with the relevant legislation of the country of production; and

3) are covered by a due diligence statement.

What products are covered by the EUDR?

The regulation applies to the following commodities:

1)     Cattle;

2)     Cocoa;

3)     Coffee;

4)     Oil palm;

5)     Rubber;

6)     Soya;

7)     Wood.

The scope of the regulation includes products listed in Annex I to the EUDR (classified under the Combined Nomenclature – CN) that contain, were fed with, or were manufactured using the above relevant commodities (referred to as “relevant products”).

Contrary to appearances, the obligations under the EUDR will not apply solely to those involved in forestry or agriculture but will cover a wide range of entrepreneurs across various industries, including food, automotive, and retail and wholesale sectors, among others.

Who is affected by the new obligations?

The regulation imposes obligations on all participants in the production or distribution chain of the relevant products. The scope of the obligations depends on the role the entrepreneur plays in the marketing of the product in question. The EUDR distinguishes two categories:

1)     Operators – natural and legal persons who, in the course of their commercial activities, place the relevant products on the EU market for the first time or export them from the EU – essentially importers, exporters and producers of relevant products;

2)     Traders – all other persons in the supply chain who, in the course of their commercial activities, make the relevant products available on the EU market. 

As a rule, operators have more obligations than traders. However, the scope of these obligations depends not only on the entrepreneur’s role in the supply chain but also on the size of the company, such as having SME status. The EU legislator provides certain simplifications for operators and traders classified as micro, small or medium enterprises.

What measures must recipients of obligations take to ensure due diligence?

The due diligence includes:

1)     the collection of information, data and documents needed to fulfil the requirements set out in Article 9 of the EUDR, which demonstrate that the relevant products comply with the Regulation;

2)     risk assessment measures as referred to in Article 10 of the EUDR, i.e. the obligation to verify and analyse the collected information and documentation to establish whether there is a risk that the relevant products are non-compliant with the Regulation;

3)     risk mitigation measures as referred to in Article 11 of the EUDR, i.e. the obligation to adopt risk mitigation procedures and measures that are adequate to achieve no or only a negligible risk that the relevant products are non-compliant.

In order to exercise due diligence under the Regulation, operators are required to establish and keep up to date a framework of procedures and measures to ensure compliance with their obligations under the regulations.

How to prepare?

To bring a company’s operations into compliance with the requirements of the EUDR, it is first necessary to conduct an internal audit to identify whether the company is producing or marketing products covered by the Regulation. Next, the company’s role in the distribution chain for each such product must be determined. Establishing these facts will enable the company to identify its applicable responsibilities and plan the necessary procedures, as well as gather and catalogue the relevant documentation required by the Regulation.

In practice, the application of the EUDR currently raises numerous uncertainties, which have only been partially addressed by supporting documents published by the European Commission[1]. Furthermore, the adoption of national legislation enabling the full implementation of the EUDR is still pending, including the appointment of an authority responsible for overseeing EUDR compliance in Poland and the establishment of penalty rules for violations of the Regulation. It is therefore essential to stay updated on the latest EUDR guidelines and the actions of the Polish legislator, and to begin the process of implementing the Regulation’s requirements as soon as possible to allow sufficient time to address any practical doubts.

Since the European Parliament voted for further substantive amendments to the EUDR at its session on 14 November 2024, the act will now be subject to renewed inter-institutional negotiations. EU bodies must agree on the final content of the act before the end of the year, prior to the original deadline for the Regulation's obligations to come into force. These last-minute amendments increase uncertainty regarding the scope of obligations for entrepreneurs. Therefore, it is all the more important to closely monitor updates on the future developments of the EUDR.

Should you have any questions regarding the upcoming changes, please do not hesitate to reach out to Julia Malinowska (julia.malinowska@bsjp.pl).