EU Commission Proposes Delay in the Application of the EUDR to Alleviate Companies’ Distress During Implementation

The phase-in period of Regulation (EU) 2023/1115 on deforestation-free products (“EUDR”) was originally slated to end on 30 December 2024. Last week, as a result of increasing pressure from the impacted industries, third countries and even some of the Member States, the EU Commission came out with a proposal to extend the phase-in period by an additional 12 months.

The aim of the regulation is to avoid having products that contribute to global deforestation or forest degradation enter or leave the EU market. At the same time, the goal is to reduce greenhouse gas emissions and biodiversity loss caused by consumption and production in the EU.

The regulation applies to certain products that contain, have been fed with or made using cattle, cocoa, coffee, oil palm, rubber, soya, and wood. Thus, the regulation impacts e.g. the forest industry, the food and feed industries, and retail companies.

Pursuant to the regulation, due diligence must be exercised before the relevant products can be placed or made available on the EU market or exported. The regulation also prohibits placing or making the relevant products available on the market or exporting them unless they

Further, the regulation requires traceability for the commodities that fall under the scope of the regulation. The due diligence statement must contain information e.g. on the country of production and geolocation of all the plots of land where the commodity contained in the product associated with the due diligence statement was produced.

The main challenges faced during the implementation process have so far been the ambiguity of certain key provisions of the regulation, the lack of guidance, and the lack of other implementation measures related to the regulation, such as the IT system through which the due diligence statements are supposed to be submitted. This has, in practice, resulted in a situation where companies have not had the possibility to effectively make use of the currently on-going transition period.

Further, many suppliers outside of the EU are not yet capable of providing all the data required by the regulation. If the regulation were to become applicable now, it would lead to significant disruptions in the supply chains of the impacted industries.

In addition to proposing the extension, the EU Commission has also published a long-awaited guidance document and updated the FAQ to support the implementation of the regulation.

Despite the possible extension to the transition period that applies to the EUDR, impacted companies should take prompt action by establishing proper due diligence systems and ensuring the traceability of the commodities that fall under the scope of the regulation as this task may be time consuming depending on the complexity of the company’s supply chains.

Our experts have hands-on experience in EUDR compliance in a global operating environment and are ready to help your business adapt to the requirements of the EUDR in order to ensure that your products are allowed to enter the EU market in the future as well.