European Union Deforestation Regulation (EUDR)

The Deforestation regulation entered into force on June 29th, 2023. This law sets out a general prohibition importing or selling on the EU market, or exporting from the EU market, certain commodities, if the latter have been made with land subject to deforestation or forest degradation after 31 December 2020.

The Deforestation Regulation applies to six commodities: cattle, cocoa, coffee, oil palm, soya, rubber and wood, as well as certain products, which contain, have been fed with or have been made using those commodities, including meat of cattle (beef), leather, cocoa butter, chocolate, selected palm oil based derivates, furniture, printed paper and plywood (“covered products”).

The law outlines a due diligence duty for companies to ensure the products they are importing, selling or exporting are in compliance with the Deforestation Regulation. Namely, that:

• the products are made with land subject to deforestation or forest degradation
• the products are made in accordance with the relevant legislation of the country of production, such as legislation regarding human rights, land-use rights, environmental protection, and tax, anti-corruption, trade and customs regulation.

To undertake due diligence, companies must ensure traceability of their products, as well as assess and mitigate the risks associated to deforestation and forest degradation in their production.

Enforcement of the regulation will occur at a national level, with each EU member state designating a competent authority. If authorities find companies are acting in breach of the Deforestation Regulation, they may require companies to undertake corrective action, such as remediation of victims or withdrawal of the product from the market, or its donation.

National authorities may also sanction non-complying companies. Sanctions can include fines of at least 4% of the operator’s annual EU turnover, confiscation of the products, confiscation of the related revenues and exclusion for up to 12 months from public procurement processes and public funding. For serious or repeated infringements, they can also entail temporary prohibition from placing or making available the products on the EU market, or the prohibition to use the simplified due diligence procedure.