How reality catches up with ideals: application of the EU Deforestation Regulation postponed until end of 2025
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Partner
Belgium
As a partner in our Regulatory & Administrative practice in Brussels, and a member of our International Life Sciences and Food & Beverage sector groups, I provide hands-on advice and assistance to our clients in public, administrative and regulatory law matters.
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Netherlands
I am a partner in our NL office, based in The Hague, where I was one of its founding lawyers in 2001.
Associate
Netherlands
As an associate in our Regulatory and Competition & EU Law team in The Hague, I advise on a wide range of regulatory matters and EU law, with an emphasis on sustainability, including ESG, Energy, and Environmental Law.
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Introduction and summary
Following its adoption by an overwhelming majority in both the European Parliament and the Council, the Deforestation Regulation (EU) 2023/1115 (“EUDR”) entered into force on 29 June 2023. Since then, the European Commission has been working hard to prepare the application that was scheduled for 30 December 2024 for large companies. However, during the past year, increasing numbers of stakeholders, inside and outside the EU, voiced concerns that companies in the value chain for the commodities in scope of the EUDR would not be able to meet the requirements on time. On 3 December 2024, the Council and the Parliament have reached a provisional agreement on a proposed targeted amendment of the EUDR.
The provisional agreement provides for a delay or ‘targeted amendment’ to the application date of the EUDR by one year. However, the extension decision in no way puts into question the objectives nor affects the substance of the law, as agreed by the EU co-legislators.
In this article, we provide an overview of the background and details of the provisional agreement that was endorsed by Parliament and Council on 4 December 2024.
Background of the targeted amendment
With the EUDR, the European Union (“EU”) aims to ensure that specific commodities that are either imported into, exported from or traded within the EU have been produced in compliance with the relevant legislation in the country of origin, have not contributed to deforestation or forest degradation, and are covered by a due diligence statement. Specifically, the EUDR sets out obligations regarding commodities such as cattle, wood, cocoa, soy, palm oil, coffee, rubber and derived products. With this Regulation, which is part of the EU Green Deal, the EU aims to address persistent environmental challenges such as deforestation, forest degradation and biodiversity loss on a global scale.
The provisions of the EUDR were initially intended to be applicable from 30 December 2024 to large operators and traders. Additionally, a special regime for micro- and small enterprises (“SMEs”) was set to become applicable as of 30 June 2025. However, concerns were raised by Member States, non-EU countries, and industry associations of traders and operators regarding the high risk of non-compliance with the provisions of the EUDR on the specified dates. For instance, the comprehensive mapping of relevant activities within the supply chain, as well as the collection and validation of data, presents a significant challenge for numerous companies.
On 2 October 2024, the Commission addressed these concerns by proposing, amongst other things, the amendment of article 38(2) of the EUDR. This Proposal primarily aimed at the compliance dates being postponed to December 2025 for large operators and traders, and 30 June 2026 for SMEs. The Proposal was agreed upon by the Council on 16 October 2024. On 14 November 2024, the Parliament voted in favour of the Commission’s Proposal. Both the Council and the Parliament stated that the postponement would increase legal certainty and predictability, while providing sufficient time for a smooth and effective implementation of the provisions of the EUDR.
After the endorsement of 4 December by the Council and the Parliament, the adopted amendments need to be published in the Official Journal of the EU, allowing the revised regime to enter into force before 30 December 2024, the originally intended application date of the EUDR.
Country benchmarking and the risk amendments
With the implementation of the EUDR, the EU introduces a so-called benchmarking mechanism. This mechanism requires the Commission to classify countries into three categories – high, standard and low-risk countries – from the application date of the regulation. Countries, or parts thereof, will be benchmarked based on the probability of deforestation in a country and the extent of the local authorities’ commitment to combating it. Low-risk countries will require simplified due diligence requirements, while high-risk countries will mandate more in-depth due diligence. Additionally, after the risk assessment of countries, imports from high, standard or low-risk countries will be subject to checks of 1%, 3% or 9%, at the border by customs. Importers who fail to comply with these regulations will not be permitted to sell their products on the internal market and may face a fine.
On 14 November 2024, as part of the voting on the postponement of the EUDR, the Parliament adopted further amendments to the EUDR, the most controversial of which entailed the new risk category of “no risk”. This new risk category was defined as a country with a stable or increasing forest area. Countries falling within this category would be subject to less stringent requirements under the EUDR, which has caused controversy amongst various stakeholders. The new risk category would promote the use of “legal loopholes” that would interfere with effective enforcement. This critique was shared by Member States. On 2 December 2024, the proposed amendment for the introduction of the no risk-category was withdrawn, and as a result, it is not included in the adopted amendments.
However, not all proposed amendments regarding the benchmarking mechanism have been retracted. According to the current Article 29(2) EUDR, the Commission is tasked with the publication of the list of low and high-risk countries by 30 December 2024. In line with the application postponement, the amendment adjusts this date to 30 June 2025.
Concluding remarks
After convincing support for its adoption, the EUDR has undergone a long and challenging post-legislative process that has resulted in its possible postponement of the compliance dates. Whether this delay is viewed positively or negatively depends on one’s perspective. However, it is certain that this postponement cannot be perceived as an excuse to delay the preparation required to comply with the EUDR. Compliance remains crucial, and all companies concerned should continue to work towards meeting their obligations under the EUDR. To assist companies in their compliance efforts, the Commission has published a guidance and an FAQ document.
If you have any questions about the recent amendment or the implementation of the EUDR, please do not hesitate to contact Pauline Kuipers, Nicolas Carbonnelle or Sander Wagemakers.
