.svg)
Get a Demo
The EU Commission has recently released the third version of the Frequently Asked Questions regarding the implementation of the EU Deforestation Regulation.
In this article, we have crafted the key updates and further clarifications provided.
The EUDR FAQs now cover a total of 130 questions with 48 new questions answered and 8 amendments to previous questions.
In the case of composite products containing multiple relevant commodities/products, due diligence only needs to be conducted on the main commodity/(derived) products. For chocolate bars containing cocoa powder, cocoa butter, and palm oil due diligence only needs to be performed for the main commodity cocoa (in this case the cocoa powder and cocoa butter under the commodity cocoa).
There is no minimum or maximum size for plots of land covered by a polygon, as long as the plot of land captures the precise area of production.
Based on the definition of a plot of land (“land within a single real estate property”) the operator should provide only the geolocation of the plot of land where the relevant commodity is produced (area B in the image).
This is the case when compliant goods from multiple places of production are mixed into the same silo, stack, pile, tank, etc., and then some of those goods are placed on the EU market.
If the silos are not regularly emptied, the operator would need to declare the place of production of all goods that entered the silo during a time period that ensures that commodities of unknown place of production are not mixed up in the process. For instance, when downloading part of the goods stored in the silo, this could be safely done by declaring the geolocation of all previous goods that entered the silo up to a minimum of 200% of the silo capacity, provided that the silo works in the first-in-first-out system. This approach applies to relevant commodities or products stored in stacks, tanks, etc., and all continuous processing.
The EUDR is built on the principle of strict traceability, whereby operators need to collect the precise geolocation coordinates corresponding to the plots of land of production. Operators are required to obtain traceability data that is as granular as possible. An operator can, in specific circumstances, provide geodata for a higher number of plots than those where the commodities were produced:
Operators may declare "in excess" only where a bulk commodity is fully traced to the plot of land and is not mixed with non-compliant commodities or those of unknown origin. When such bulk commodity is mixed up during logistics or production, for instance in storage silos or mills, the operator can declare in excess only when a part of the whole is placed on the market. For declaration ‘in excess’, full responsibility for compliance of all plots is assumed. If one plot in the DDS is not compliant, the entire set of plots is non-compliant.
Traceability practices that aim to declare an excessive number of plots (region or country-wide) are generally not in line with the EUDR.
Competent Authorities of the EU member states may conduct field audits in third countries, provided that such third countries agree, through cooperation with the administrative authorities of those third countries.
For commodities other than cattle, the crop year and/or harvesting season could be used as the date of production (refers to the date of harvesting of the commodities), and the time range of production (refers to the period of the production process (for instance, in the case of timber, the duration of the relevant harvesting operations)) if more precise information is NOT available.
For relevant products under the commodity “cattle”, the time range of production refers to the lifetime of the animal from the moment the cattle was born until the time of slaughtering.
If live cattle is placed on the EU market (e.g., by importing or the first selling of a cow after it was born in the EU), all geolocations until the first placing on the EU market will have to be submitted with the DDS. If live cattle is made available on the EU market, non-SME traders will be obliged to add all additional geolocations of establishments where the cattle were kept after the first placing on the EU market (see Art. 9(1)(d)).
Operators and traders cannot rely on the existence of national laws prohibiting the sharing of required data to be exempt from the obligation to collect and upload that data into the Information System. Operators and traders must submit the geolocation information as part of their obligations; otherwise, the operators and traders cannot comply with the requirements on due diligence and, therefore cannot place on, make available on, or export relevant products from the EU market.
Second-hand products that have completed their lifecycle and would be otherwise disposed of as waste (see Recital 40 and Annex I) are not subject to the obligations of the EUDR.
If a person places on the EU market a relevant product manufactured or produced in the EU, it is thereby supplying the product on the market for the first time. Such activity is relevant under the EUDR, no matter if the relevant product is placed on the market for a) the purpose of processing, b) distribution to (non-) commercial consumers, or c) use in the business of the operator itself (see Art. 2 (19)). The company is an operator and needs to exercise due diligence and submit a DDS.
After a product has been placed on the market, it is “supplied” on the market for distribution, consumption, or use if there is an agreement between two or more legal or natural persons for a transfer of ownership or an equivalent concerning the product in question (e.g. a sale or a gift agreement) after the stage of manufacture (and production in the case of commodities) being made available has taken place. The EUDR does not put obligations on those who offer logistical services along the supply chain (e.g. shipping/transport agents or customs representatives are not ‘operators’ or ‘traders under the EUDR).
In case of multiple occasions of internal processing (eg. relevant product cocoa beans are being processed into cocoa powder (relevant product) and subsequently into food preparations containing cocoa (relevant product) by the same non-SME company which then places the food preparations on the market by selling them to another company), obligations arise only for the placing on the market of the last relevant product (food preparations).
Products made solely from bamboo are not in the scope of the EUDR. Article 1 (1) defines that for the EUDR the ‘relevant products’ are only those that contain or are made from relevant commodities, amongst them ‘wood’. The definition in Article 2 (2) also clarifies that for the EUDR the HS codes listed in Annex I are only pertinent to identify which products are captured by the EUDR.
Following the FAO explanatory notes, bamboo is a non-wood forest product, consequentially bamboo does not fall under the commodity wood.
Operators further down the supply chain are those who either transform a relevant product (which has already been subjected to due diligence) into another product or export a relevant product (which has already been subjected to due diligence).
SME operators further down the supply chain are not required to a) exercise due diligence for parts of their products that were already subject to due diligence; or b) submit a due diligence statement in the Information System (Art. 4 (8)). However, they still have to provide due diligence reference numbers obtained from previous steps in the supply chain upon request of the competent authorities.
For parts of relevant products that have not been subject to due diligence, SME operators should exercise due diligence in full and submit a due diligence statement.
Upstream operators will be able to decide whether the geolocation information contained in their due diligence statements submitted in the IS will be accessible and visible for downstream operators via the referenced due diligence statements inside the Information System.
If a natural or legal person established outside the EU places relevant products on the market, according to Art. 7 the first person established in the Union who makes such products available on the market should be deemed to be an operator. This means that in this case, there will be two operators within the meaning of the Regulation – one established outside and one inside of the EU.
Non-EU operators will only have access to the Information System if they have a valid EORI number, as only in this case they will need to submit a due diligence statement after having conducted due diligence before lodging a customs declaration. They will have access to the system in the role of an operator and not as an authorized representative, according to Art. 2 (22), the authorized representative must be established in the Union.
The adjusted sizes for SMEs in the Directive 2013/34/EU will apply to EU companies only after having been transposed into national law in the Member State in which a company is established.
The size criteria decisive for Art. 38 (3) and the entry into application of the Regulation by 30 June 2025 are dependent on the size thresholds contained in Directive 2013/34/EU which were in force by 31 December 2020.
The initial Directive 2013/34/EU clarified that medium-sized undertakings “shall be undertakings which are not micro-undertakings or small undertakings and which on their balance sheet dates do not exceed the limits of at least two of the three following criteria:
(a) balance sheet total: EUR 20 000 000;
(b) net turnover: EUR 40 000 000;
(c) average number of employees during the financial year: 250.”
Delegated Directive (EU) 2023/2775 modifies this in a way that the threshold for balance sheet total is now EUR 25 000 000, and net turnover EUR 50 000 000, see Art. 1 (3) Delegated Directive (EU) 2023/2775.
Non-SME traders also retain responsibility for relevant products they make available on the EU market.
“Forest degradation” means structural changes to forest cover, such as the conversion of primary forests or naturally regenerating forests into plantation forests or other wooded land and the conversion of primary forests into planted forests (Art. 2(7)).
.png)
To comply with the forest degradation element of the ‘deforestation-free’ definition, operators will need to establish whether the forest type up to 31 December 2020 was primary forest or naturally regenerating forest, then assess whether the forestry activities associated with wood harvesting and planned post-harvesting activities, cause a conversion to a different forest type amounting to ‘forest degradation’.
Operators could take into account all data and information available at the date of harvest, forest management legislation of the country, forest management plans, reforestation plans and planned post-harvesting activities, restoration and conservation plans, other types of plans, management procedures, etc. - to assess whether there is a risk that the harvest induces forest degradation.
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.
Forests may be impacted by other processes, including climate change, disease outbreaks, fires, etc. 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.
If forest degradation is induced by other processes that are unrelated to the harvesting operations or deforestation activities, the products on those plots of land could still be considered deforestation-free. 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.
The relevant products would not be compliant with the Regulation if they were sourced from an area where harvesting activities induced forest degradation in the period prior to submitting a due diligence statement.
A breach of the due diligence obligations could be found if the risk assessment part of the due diligence has not been properly conducted, because relevant information or specified criteria were overlooked, including post-harvesting plans for the plot of land.
In contrast, where due diligence was properly exercised at the time, and the relevant products were compliant when they were placed on the market, the compliant status of the relevant products – and those of derived products – will not change based on events that occur after a product has been placed on the market (or exported) that could not have been identified as a potential risk at the time of submitting a due diligence statement.
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’.
Placing on the market relevant commodities or relevant products produced outside of the EU requires customs clearance prior to placing on the market. In this context, only a customs declaration (neither a bill of lading nor a other commercial or logistics document) would be considered as adequate evidence, if it can be directly linked to the product in question.
The EUDR will be enforceable from 30 December 2024. Art. 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 that have already reported relevant elements covered in Art. 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.
No. Operators and traders must comply with their respective due diligence obligations in accordance with Articles 8, 9, 10, and 11. 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 Art. 9, 10, and 11 ) are covered.
While spatial imagery tools can greatly help operators and traders in conducting their due diligence obligations (to ascertain that a product is deforestation-free) and Member States’ competent authorities in performing checks, the Regulation does not impose the use of specific satellite imagery tools, or threshold on satellite imagery resolution, to document the absence of deforestation.
A due diligence statement can cover multiple physical batches/shipments.
The operator has to confirm that due diligence was carried out for all relevant products.
In the case of imported products, the customs declaration of the relevant commodities or relevant products in question will be accepted as evidence of having been placed on the market before the date of application. For EU-produced goods, other documentation should be accepted as evidence, for example, documentation relating to the production e.g. felling tickets, ear tag of cattle, bill of lading, proforma invoice accompanying the delivery to the customer, CMRs (Convention on the Contract for the International Carriage of Goods by road), delivery notes, and any other documents showing evidence that goods are transferred between 2 parties which can be linked directly to the relevant product in question.
Provided that all conditions detailed in Art. 3(a) - (c) are fulfilled, products to be placed on the EU market from entry into application, and products placed on the EU market during the transition period (thus exempt), accompanied by evidence of having been placed on the EU market during the transition period, can be mixed together before being placed on the EU market.
The Due Diligence Statement has to be uploaded in the Information System only for the relevant products that are subject to the due diligence obligations under the Regulation. If operators and traders mix commodities placed on the EU market during the transitional period with newer (post-transitional period) stocks, only the information relevant to commodities newly placed on the EU market should be part of the due diligence statement.
Member States have the discretion to define the penalties, including the level of fine. For legal persons, the maximum level of the penalty cannot be lower than 4 % of the operator’s or trader’s total annual Union-wide turnover in the financial year preceding the fining decision, calculated in accordance with the calculation of aggregate turnover for undertakings laid down in Art. 5(1) of Council Regulation (EC) No 139/2004. The level of fines should increase where necessary, particularly in case of repeated infringements. The penalties should ensure that they effectively deprive those responsible of the economic benefits derived from their infringements, in accordance with the effective, proportionate, and dissuasive principle.
CEO
.svg)
Caroline is an experienced data scientist with a management degree from TU Munich and a degree in earth observation from the University of Würzburg, which is co-chaired by the German Aerospace Center (DLR). She has worked as a data scientist in the areas of nature conservation and land use change monitoring at WWF, the German Centre for Integrative Biodiversity Research (iDiv), and at tech companies such as Celonis and Deloitte.
