Subjects of obligations

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 1 I that has not been subject to due diligence in a prior step of the supply chain (for example importers sourcing cocoa) are, regardless of their size, subject to the obligation of filing a due diligence statement.

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.

Relevant commodities and products can only be placed on the EU market if they are deforestation-free and comply with the relevant legislation of the country of production, Art. 3 (b), Art. 2 (40) EUDR.

"Relevant legislation" may include, among others, national laws (including relevant secondary law) and jurisprudence as well as international law as applicable in domestic law. The Regulation presents a non-exhaustive list of legislative areas without specifying particular legal acts, as these differ from country to country and may be subject to amendments. According to the definition, the legislation listed in letters (a) to (h) must be interpreted as being linked to the area of production. For the legislation on environmental protection, the meaning and purpose stipulated in Art. 1 EUDR should be taken into account. Therefore, legislation with a link to the protection of forests, the reduction of greenhouse gas emissions or the protection of biodiversity is relevant.

Relevant documentation is required for the purposes of the risk assessment, Art. 9 (1) (h), 10 EUDR. Such documentation may, for example, consist of official documents from public authorities, contractual agreements, court decisions or impact assessments and audits carried out. In any case, the operator has to verify that these documents are verifiable and reliable, taking into account the risk of corruption in the country of production. 

The Commission will issue a specific guidance document on legality in due course.

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 required a) neither to exercise due diligence for parts of their products that were already subject of due diligence exercise; b) nor to submit a due diligence statement in the Information System. But 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.

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).

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.

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.

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.