Scope

Seven commodities - palm oil, cattle, soy, coffee, cocoa, timber and rubber as well as derived products (such as beef, furniture, or chocolate) are included in the scope of the Regulation. They have been chosen on the basis of a thorough Impact Assessment identifying them as the main driver of deforestation due to agricultural expansion. This analysis aimed to select, building on scientific data and previous research, the commodities through which European production and consumption has been contributing the most to global deforestation and forest degradation. Based on the findings a cost-benefit analysis was conducted to further reduced the selection and define where an EU policy intervention could be more efficient. This selection was done objectively, treating equally commodities produced anywhere in the world, within or outside Europe. 

The Commission proposes a progressive scope of the commodities to be regulated, reviewing and updating the list regularly, taking into account new data. This will allow adapting it to changing deforestation patterns. 

The Regulation applies even-handedly to products from outside of the EU and those from the EU, there is no discrimination. The Regulation applies to products listed in Annex I, whether there are produced in the EU or imported.  

The exact list of products is to be found in Annex I. Products not included in Annex I are not subject to the requirements of the Regulation, even if they contain relevant commodities in the scope of the Regulation. For example, soap will not be covered by the Regulation, even if it contains palm oil. 

Products included in Annex I that do not contain, or are not made of, the commodities listed in Annex I are not covered by the Regulation.  

“ex” before the HS code of products in Annex I means that 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 which 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. 

Operators further down the supply chain are those who transform a product listed in Annex I (which has already been subjected to due diligence) into another product listed in Annex I. Their obligations vary depending on whether they are Small and Medium-sized Enterprises (SMEs) or not. 

When submitting their due diligence statement in the Information System, non-SME operators further down the supply chain may refer to due diligence performed earlier in the supply chain by including the relevant reference number for the parts of their relevant products that were already subject to a due diligence. However, they are obliged to ascertain that due diligence was carried out and they retain legal responsibility in the event of a breach of the Regulation. For parts of relevant products that have not been subject to due diligence, non-SME operators shall exercise due diligence in full and submit a due diligence statement. 

SME operators further down the supply chain are subject to the same obligations as an operator and retain legal responsibility in the event of a breach of the Regulation. However, in respect of parts of their products that have been subject to a due diligence, they are not required to a) exercise due diligence for parts of their products that were already subject of due diligence exercise; b)  to submit a due diligence statement in the Information System. However, 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. 

A non-SME trader is a trader which is not a small and medium-sized undertaking pursuant to Article 2(30) of EUDR. This provision refers to the definitions provided in Article 3 of Directive 2013/34/EU. 

This will essentially include any large company that is not an operator and commercialises the products included in Annex 1 on the market, for instance, large supermarket or retail chains. 

By virtue of Article 5(1) of the Regulation, the obligations of large traders are the same as those of large downstream operators: a) they need to file a due diligence statement; b) 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); c) they are liable in case of breach of the Regulation, also for a due diligence carried out or a due diligence statement submitted by an upstream operator. 

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. 

The Regulation applies both to exports and to imports. Operators exporting relevant products will have to include the reference number of the due diligence statement in their export declaration. Operators exporting products made with commodities that were already covered by a due diligence statement may also avail themselves of relevant simplifications in article 4 (see information for products produced in the EU). 

Commercial activity is understood as an activity taking place in a business-related context. 

The combined definitions of “operator” (Article 2.15) and of ‘in the course of a commercial activity’ (Article 2.19) imply that any  person, which places a relevant product on the market for selling (with or without transformation) or as a gift, for the purpose of processing or for 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 the due diligence statement. 

he nomenclature governed by the Convention on the Harmonized Commodity Description and Coding System, commonly known as "HS Nomenclature", is an international multipurpose nomenclature which was elaborated under the auspices of the World Customs Organization (WCO). This nomenclature assigns six-digit codes to classify goods and applies worldwide. Countries/ regions can add additional numbers to the universal six-digit HS Nomenclature for more detailed classification. 

The Combined Nomenclature (CN code) of the European Union is an eight-digit commodity code that further subdivides the global HS Nomenclature into more specific goods to address the needs of the European Community. 

The CN code is the basis for the declaration of goods for import into or export from the European Union, and also for intra-EU trade statistics. Commodities and products in Annex I of the Regulation are classified by their CN codes. Relevant products in Annex I of the Regulation are classified in the Combined Nomenclature set out in Annex I to Regulation (EEC) No 2658/87. 

At import, when releasing goods for free circulation as defined in article 201 of the UCC Regulation (EU) No 952/2013, the CN code can be further subdivided to a ten-digit TARIC code specifically created to address the needs of the EU legislation. When declaring goods for export procedure as defined in article 269 of the UCC Regulation (EU) No 952/2013, the final subdivision can go up to an eight-digit CN code. 

Supply chain members need to classify their products based on Annex I to the basic CN Regulation (Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff) to establish whether the Regulation applies to them. The HS codes can evolve every 5 years. The EU’s CN Regulation is adopted each year, to reflect any updates. 

See for more information: Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff 

For example, 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 as packaging material 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 are also falling 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  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. 

The definition of “deforestation” in the Regulation encompasses the conversion of forest to agricultural use, whether human-induced or not, which includes situations dues to nature disasters. A forest that has experienced a fire and is then subsequently converted into agricultural land (after the cut-off date) would be considered deforestation under the Regulation. In this specific case, an operator would be prohibited from sourcing commodities within the scope of the Regulation from that area (but not because of the forest fire). Conversely, if the affected forest is allowed to regenerate, it would not be deemed deforestation, and an operator could source wood from that forest once it has regrown. 

The Regulation relies on the definition of ‘forest’ of 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 the 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 entry into force of the Regulation will assess the impact of expanding it to ecosystems beyond ‘forests’ and beyond ‘other wooded land’. 

The conversion from primary or naturally regenerating forest to plantation forests or to other wooded land is already part of the definition of ‘forest degradation’, and wood products coming from such converted land cannot be placed on the market or exported. 

All operators retain responsibility for the compliance of the relevant product they place on the market or export. The Regulation also requires operators (or traders which 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 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.