Deforestation Regulation implementation

The Regulation relies on the definition of ‘forest’ by the Food and Agriculture Organization of the United Nations. This includes four billion hectares of forests – the majority of habitable land area not already used by agriculture – which encompasses areas defined as savannahs, wetlands and other valuable ecosystems in national laws. 

The first review of the Regulation - to be done within one year of its entry into force - will assess the impact of further expanding the scope to ‘other wooded land’.  The second review - to be done within two years of the Regulation's entry into force - will assess the impact of expanding it to ecosystems beyond ‘forests’ and beyond ‘other wooded land’. 

The term 'global deforestation' means deforestation taking place worldwide (both in the EU and outside) due to the conversion of forest to land for agricultural use, whether human-induced or not (in line with the definition set out in Article 2). 

If the woody vegetation has or is expected to surpass more than 10% canopy cover of tree species with a height or expected height of 5 metres or more, it should be classified as ‘forest’, based on the Food and Agriculture Organization (FAO) definition.

For example, young stands that have not yet but are expected to reach a crown density of 10% and a tree height of 5 metres are included under the definition of ‘forest’, as are temporarily unstocked areas, whereas the predominant use of the area remains forest.

Deforestation under the Regulation is defined as conversion of forest to agricultural use. Conversion for other uses, such as urban development or infrastructure, does not fall under the deforestation definition. For instance, wood from a forest area that has been legally harvested to build a road would be compliant with the Regulation.

YES

Rubber cultivation falls within the definition of ‘agricultural plantation’ under the Regulation, which means “land with tree stands in agricultural production systems, such as fruit tree plantations, palm oil plantations, olive orchards and agroforestry systems where crops are grown under tree cover”.

This definition includes all plantations of relevant commodities other than wood. Agricultural plantations are excluded from the definition of ‘forest’.  This means that the replacement of a forest with a rubber plantation would be considered as deforestation under the Regulation. 

The definition of ‘deforestation-free’ (Art 2 13(b)) refers specifically to forest degradation, requiring that wood have been “harvested from the forest without inducing forest degradation after 31 December 2020”. The reference to ‘inducing’ creates a causal link between the wood harvesting and the process of forest degradation.    

This reflects the fact that forests may be impacted by other processes, including climate change, disease outbreaks, fires unrelated to harvesting or deforestation. These potential forms of forest degradation are beyond the scope of the Regulation; the EUDR addresses forest degradation driven by the forestry activities associated with wood harvesting and subsequent regeneration of the forest. 

The products of harvesting activities on those plots of land could still be considered deforestation-free, provided that the harvesting operations themselves do not induce forest degradation.  In those cases, it would be important to have sufficient data and evidence to demonstrate that any change in forest status between the two time periods was unrelated to wood harvesting.    

In addition, when the purpose of the harvesting of trees is forest protection – for instance, when harvesting damaged wood after a storm or a fire; or when cutting infected trees to prevent the spread of pests and disease – it should not be understood that harvesting has 'induced' the forest degradation. In those cases, it would be important to have sufficient data and evidence to demonstrate the actual purpose of the tree harvesting.   

Products sourced from an area where harvesting activities induced forest degradation are not compliant with the Regulation.

Operators could take into account all data and information available at the date of harvest, the relevant forest management legislation of the country, including forest sustainable management plans or legal framework for sustainable harvesting, as well as information and data on the pre-harvest state of the forest, the harvesting regime and its likely impacts, the regeneration treatments, other planned forest protection and restoration measures, and other information relating to the risk assessment criteria detailed in Article 10 of the Regulation. 

If, at the moment of harvest, the intended end-purpose of the plot of land (reforestation or conversion) is not known, then there is a risk that these harvesting activities may induce forest degradation. Hence those wood products cannot be placed on, made available on, or exported from, the EU market unless this risk is mitigated to no or negligible level.   

If the degraded status of the forest persists over time, any future harvesting on a plot of land where wood harvesting operations have provoked forest degradation after 31 December 2020 would not be ‘deforestation-free’ and the relevant products could not be placed on the market. On the contrary, if in the future the forest is regenerated and its status changes into a forest category that would not have been considered as falling under the definition of forest degradation in the first place, then the wood extracted from new harvesting activities on that plot of land could be considered ‘deforestation-free’.

In certain forest types, deliberate planting or seeding may be an effective and preferred method of forest restoration, including after natural events (e.g. storms, fire) or following management measures for invasive alien species, pests or disease., or to promote regeneration on hard environments including poor soils, drought, frost and or where effects of climate change are noticeable. Therefore, and while the conversion of primary forest or naturally regenerating forest to plantation forest would constitute “forest degradation”, under the Regulation the definition ‘plantation forest’ excludes “forests planted for protection or ecosystem restoration, as well as forests established through planting or seeding, which at stand maturity resemble or will resemble naturally regenerating forests”.

This exception should logically also apply to ‘planted forests’.

When there is an “ex” before the HS code of products in Annex I, the product described in the Annex is an 'extract' from all the products that can be classified under the HS code.

For instance, code 9401 might include seats made of raw materials other than wood, but only wooden seats are subject to the requirements of the Regulation.

Products with an HS code not included in Annex I, but might include components or elements derived from commodities covered by the Regulation – such as cars with leather seats or natural rubber tyres – are not subject to the requirements of the Regulation.

Similarly, HS 0201 covers “Meat of bovine animals, fresh or chilled”, whereas ex 0201 in Annex I of the Regulation covers only “Meat of cattle, fresh or chilled”, meaning cattle of the genus Bos and its sub-genres: Bos, Bibos, Novibos and Poephagus, but bison (Bison genus) or buffalo (Syncerus genus) meat are not covered by the Regulation. 

In case the relevant product, e.g. “ex 4011 New pneumatic tyres, of rubber” is made from a mix of synthetic and natural rubber then the operator (or non-SME trader) has to exercise due diligence only for the natural rubber ingredient.

‘Negligible risk’ refers to the level of risk that applies to relevant products to be placed on the market or exported, where, on the basis of a full assessment of product-specific and general information, and, where necessary, of the application of the appropriate mitigation measures, those commodities or products show no cause for concern as to not comply with Article 3, point (a) or (b). 

Operators and traders (that are not SMEs) may only conclude on ‘negligible risk’ (which is a pre-condition for placing or making available on the market or exporting relevant products) as a result of conducting due diligence, as per Article 4(1). Conducting due diligence is a core obligation of operators and traders under this regulation, which is not subject to any exemption. 

The ‘negligible risk’ element does not apply to commodities (there is no ‘risk status’ per commodity in the Regulation). 

In the case of a producer selling packaging to manufacturers (to protect the final product - not to be sold as a final product to consumers), the text "not including packaging material used exclusively as packaging material to support, protect or carry another product placed on the market" in Annex I under Wood HS code 4415 should be understood as follows:- 

If any of the concerned packaging is placed on the market or exported as a product in its own right (i.e. standalone packaging), rather than as packaging for another product, it is covered by the Regulation and therefore due diligence requirements apply. 

If packaging, as classified under HS code 4415, is used to ‘support, protect or carry’ another product, it is not covered by the Regulation.  

Packaging material used exclusively to support, protect or carry another product placed on the market is not a relevant product within the meaning of Annex I of the Regulation, regardless of the HS code under which they fall.   

User manuals accompanying shipments also fall under this exemption unless they are purchased in their own right.

Most recycled paper/paperboard products contain a small percentage of virgin pulp or pre-consumer recycled paper (for example, discarded paperboard scraps from cardboard box production) to strengthen the fibres. 

Annex I states that the 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 as defined in Article 3, point (1), of Directive 2008/98/EC. So, no obligation applies under the Regulation in respect of the recycled material.  

On the contrary, if the product contains a percentage of non-recycled material, then it is subject to the requirements of the Regulation and the non-recycled material will need to be traced back to the plot of origin via geolocation. 

Annex I also clarifies that generally, by-products of a manufacturing process are subject to the Regulation. In the case of paper/paperboard which constitutes a recovered (waste and scrap) product, such paper and paperboard is exempt from the scope according to Annex I (see Chapters 47 and 48 of the Combined Nomenclature). 

A product placed on the market, made available on the market or exported after the transition period may contain products or commodities placed on the market during the transition period. 

For those products and commodities, the operators in the supply chain are only obliged to gather verifiable evidence proving when they were placed on the market. This is without prejudice to article 37(2) with regard to timber and timber products. The standard obligations of the regulation apply to all other products and commodities used.

To comply with the forest degradation element of the ‘deforestation-free’ definition, operators will need to establish whether the forest type prior to and including 31 December 2020 was primary forest or naturally regenerating forest (the two forest types to which the ‘forest degradation’ definition applies), then assess whether the forestry activities associated with wood harvesting, as well as planned post-harvesting activities, could cause or bring about (induce) a conversion, or have caused a conversion, to a different forest type amounting to forest degradation.   

It is important to take into account the relevant forest management legislation of the country, including forest sustainable management plans or legal framework for sustainable harvesting, as well as information and data on the pre-harvest state of the forest, the harvesting regime and its likely impacts, the regeneration treatments, other planned forest protection and restoration measures, and other information relating to the risk assessment criteria detailed in Article 10 of the Regulation.    

If there is evidence indicating that harvesting activities may induce forest degradation*, then the wood product cannot be placed on, made available on, or exported from, the EU market unless this risk is mitigated to no or negligible level.    

If, at the moment of harvest, the intended end purpose of the plot of land (reforestation or conversion) is not known, then there is a risk that these harvesting activities may induce forest degradation. Hence those wood products cannot be placed on, made available on, or exported from, the EU market unless this risk is mitigated to no or negligible level. 

*Some examples of indications that harvesting activities may induce forest degradation could include:-

• Management plans (or other available information) indicating that proposed harvesting and regeneration activities may be insufficient to prevent forest degradation in line with the definitions of the Regulation, 
• Harvesting activities carried out that deviate from those proposed in the forest sustainable management plan or those authorised by the legal framework of the country,     
• Post-harvest planting and forest management plans that appear to meet the criteria for ‘planted’ or ‘plantation forest’, in line with the definitions of the Regulation, or  planned regeneration measures (i.e. planting or seeding) or the absence of such planned measures.

Composite products are those that contain multiple different relevant commodities or products (for example, a chocolate bar containing cocoa powder, cocoa butter and palm oil). Operators placing such products on the EU market will need to conduct due diligence only on the main commodity and (derived) products deemed relevant under the EUDR, this being the commodity contained in the left column of Annex I.

For example, for chocolate bars (Code 1806), the relevant commodity linked to it is cocoa. This means that the due diligence obligation and information requirements only extend to relevant products listed in the right column of Annex I under the relevant commodity that the chocolate bar contains or has been made using. In this instance, this is the cocoa powder and cocoa butter under the commodity cocoa. 

“Commercial activity” is defined in the Regulation as an activity taking place in a business-related context. 

The combined definitions of “operator” (Article 2(15)) and ‘in the course of a commercial activity’ (Article 2(19)) imply that any  person who places a relevant product on the market for selling (with or without transformation) or as a gift, for the purpose of processing or distribution to commercial or non-commercial consumers, or for use in the context of its commercial activities will be subject to the due diligence requirements and present a due diligence statement.

All operators and traders retain responsibility for the compliance of the relevant product they place on the market, make available, or export. Their name shall be recorded in the due diligence statement and they shall retain the full responsibility under the Regulation. The Regulation also requires operators (or traders that are not SMEs) to communicate all necessary information along the supply chain.

Traders also retain responsibility for relevant products they make available on the market or export. 

Therefore, in case of a breach of the Regulation (if products have already entered the market or in case information is not properly disclosed by the operator), each actor of the supply chain concerned by the placing or making available on the market or the export of a relevant product retains responsibility and may be held liable.

The internal organisation and due diligence policy of a group of companies (a mother company and its subsidiaries) is not governed by the Regulation.

As defined in Article 2(15) of the Regulation, an operator is a natural or legal person who places relevant products on the market (incl. via an import) or exports them in the course of commercial activity. 

This definition also covers companies that transform one product of Annex I (which has already been the object of due diligence) into another product of Annex I. For example, if company A, based in the EU, imports cocoa butter (HS code 1804, included in Annex I), and company B, also based in the EU, uses that cocoa butter to produce chocolate (HS code 1806, included in Annex I) and places it on the market, both company A and B would be considered operators under the Regulation. 

Operators placing on the market a product listed in Annex I that has not been subject to due diligence in a prior step of the supply chain are subject to the obligation of filing a due diligence statement.

A large company that is not an operator that markets products included in Annex I, for example, a supermarket or retail chain, also falls under the scope of the Regulation and must fill in a due diligence statement.

In line with Article 5(1) of the Regulation, the obligations of large traders are the same as those of large downstream operators:-

1. They must file a due diligence statement;
2. When doing so, they may rely on the due diligence previously carried out in the supply chain but, in such a case, they are subject to the provisions of Article 4(9);
3. They are also liable, in the case of a breach of the Regulation, for due diligence carried out or a due diligence statement submitted by an upstream operator.

SME operators (including those transforming or exporting products further down the supply chin) are subject to the same obligations as an operator and retain legal responsibility in the event of a breach of the Regulation.

However, concerning parts of their products that have been subject to due diligence, they are not required to:-

1. Exercise due diligence for parts of their products that were already subject to a due diligence exercise;
2. Submit a due diligence statement in the Information System. They still have to provide due diligence reference numbers obtained from previous steps in the supply chain.

For parts of relevant products that have not been subject to due diligence, SME operators shall exercise due diligence in full and submit a due diligence statement.

According to Article 6, the operator and trader may mandate authorised representatives to submit a due diligence statement on their behalf. In this case, the operator and trader will retain responsibility for the compliance of the relevant products. 

If the operator is a natural person or microenterprise, it may mandate the next operator or trader in the supply chain to act as its authorised representative, provided it is not a natural person or micro-enterprise. In this case, the mandating operator retains responsibility for the compliance of the product.

Standing trees as such do not fall within the scope of the Regulation. Depending on the detailed contractual agreements, the ‘operator’ at the moment of harvesting could be either the forest owner or the company that has the right to harvest relevant products, depending on who is placing the relevant product on the market or exporting it. 

Mass balance chains of custody that allow for the mixing - at any step of the supply chain - of deforestation-free commodities with commodities of unknown origin or non-deforestation-free commodities are not allowed under the Regulation, because they do not guarantee that the commodities placed on the market or exported, are deforestation-free.

Therefore, the commodities placed on the market, or exported, need to be segregated from commodities of unknown origin or from non-deforestation-free commodities at every step of the supply chain. As mass balance is consequently ruled out, full identity preservation is not needed.

Operators shall collect, organise and keep for five years from the date of the placing on the market or export of the relevant commodities and products, the information gathered based on Article 9, accompanied by evidence.

Based on the provisions of Article 10 (4) and Article 11 (3), the operators should be able to demonstrate how due diligence was carried out and what mitigation measures were put in place in case risk was identified. Operators must also keep a record of the due diligence statements for five years from the date when the statement is submitted in the Information System, which is before the date of placing the product on the market or exporting it. In that regard, non-SME traders have the same obligations as the operators. 

SME traders must keep for at least five years the information listed in Article 5 (3), including the due diligence reference numbers from the date of the making available on the EU market or export of relevant products. 

The Regulation provides that when it comes to reporting obligations, operators also falling within the scope of other EU legislative instruments that lay down requirements regarding value chain due diligence may fulfil their reporting obligations under the Regulation by including the required information when reporting in the context of other EU legislative instruments (Article 12(3)).

Certification schemes can be used by supply chain members to help their risk assessment to the extent that the certification covers the information needed to comply with their obligations under the Regulation. Operators and traders that are not SMEs will still be required to exercise due diligence and they will remain responsible for any breach.

The EUDR will be enforceable from 30 December 2024 (except for micro and small companies, where the date is 30 June 2025). Article 12(3) requires relevant companies to publish an annual report about their activities to comply with requirements under the EUDR. As 2025 will be the first year for which the EUDR applies, the first report (covering the year 2025) will have to be published after 30 December 2025. 

Companies which have already reported relevant elements covered in Article 12(3) in the context of their reporting obligations under other EU-relevant legislation (such as the EU Corporate Sustainability Due Diligence Directive) do not have to repeat the reporting.

The template for the due diligence statement of operators and traders is the same for all commodity sectors (see Annex II of the Regulation) on which the form in the Information System is based.

NO

Operators and traders must comply with their respective due diligence obligations in accordance with articles 8, 9, 10 and 11 of the Regulation. Achieving no or negligible risk is a pre-requisite for placing/making available/exporting relevant products on/from the EU market.

Please note that due diligence is not a “tick-the-box exercise”. Hence, it may depend on the specific context and supply chain, provided that the different steps of due diligence, as described in the regulation (i.e. information requirement, risk assessment and risk mitigation, in line with articles 9, 10 and 11 EUDR), are covered.

Spatial imagery tools can greatly help operators and traders conduct their due diligence obligations (to ascertain that a product is deforestation-free) and Member States’ competent authorities perform checks.

However, the Regulation does not impose the use of specific satellite imagery tools, or thresholds on satellite imagery resolution, to document the absence of deforestation.

Operators, traders and/or their authorised representatives must register if they are subject to submitting a Due Diligence Statement under the Regulation. Alternatively, they can request the services of an authorised representative (who, in turn, must be registered in the system as such).