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On 14 November 2024, the European Parliament, following in the steps of the EU Commission and the EU Council, approved a 12 month postponement of the EUDR[1]. However, along with the approval of the postponement, the Parliament also adopted certain other amendments to the EUDR, leaving the EUDR to now be re-discussed in new trilogues (interinstitutional negotiations) between the EU legislative institutions.
Whether the 12 months’ postponement will indeed become effective (and if so, whether this will be adopted before the end of 2024) or whether the regulation will become applicable, as originally intended, on 30 December 2024 depends on the ability of the Parliament, the Council and the EU Commission to agree on a new text.
The EUDR prohibits the sale of certain products within or outside the EU market unless the following three conditions are satisfied:
The following specific commodities (including products made with or containing these commodities) is comprised by the EUDR:
The rules will be applicable to companies that place in-scope products on the EU market or make them available.
Although the EUDR applies only to the specific types of commodities and product categories, some of these categories are very broad and include also for example certain packaging materials, which will be relevant for a large number companies.
The main obligations target non-SME companies, while SME companies are permitted certain exemptions from the rules.
The EUDR introduces substantial penalties for violating the rules, including fines, confiscation, debarment from public procurement and temporary prohibition against selling relevant products.
Pursuant to the EUDR as originally adopted, the application date would have been December 30, 2024. However, with the postponement that may become reality, the application will instead be 30 December 2025 for large companies and 30 June 2026 for micro- and small companies.
The pressure to postpone the application of the EUDR has in particular been based on input from internal and external stakeholders, including third countries, challenges in meeting regulatory compliance within the given timeframe as well as delay from the regulator’s side in providing relevant IT systems and guidance.
A postponement would allow EU companies as well as competent national authorities additional time to prepare for the requirements set out in the EUDR and to make the necessary adjustments and take necessary means to ensure compliance.
The deadline for the EU Commission to assign risk profiles to countries and regions would, however, only be postponed by 6 months giving in-scope companies a better understanding of their due diligence obligations before the requirements take effect.
A postponement of the EUDR allows EU companies more time to carefully assess if and to what extent they are comprised by the new requirements.
Where compliance with the EUDR is required, companies should review their existing processes, governance frameworks, and supply chain structures and risks, to ensure compliance with the new obligations. This is a time consuming task that requires involvement of several stakeholders.
Gorrissen Federspiel’s Compliance & Sustainability team assists companies with EUDR compliance, including the scope of applicability analysis and implemention of relevant compliance measures. If you have any questions, please feel free to contact a member of the team.
For more information on the new regulation to reduce global deforestation, please also see Gorrissen Federspiel’s newsletter of June, 23 2023.
[1] Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation (Regulation – 2023/1115 – EN – EUR-Lex)