EU Deforestation Regulation: Commission publishes guidance and proposes 12-month delay to application date

On 2 October 2024, the European Commission announced (see EU press release) that it has published:

• a legislative proposal to delay the application of the EU Deforestation Regulation (EUDR) by 12 months; 
• guidance on the EUDR; 
• updated FAQs; and 
• the principles of the methodology it will apply to the EUDR benchmarking exercise, which will be used to classify third countries as low, standard, or high risk for due diligence purposes.

Background

Under the EUDR, any operator or trader who places commodities such as cattle, wood, cocoa, soy, palm oil, coffee, rubber (and some of their derived products, such as leather, chocolate, tyres, or furniture) on the EU market, or exports from it, must be able to prove that the products do not originate from recently deforested land or have contributed to forest degradation. The Regulation imposes mandatory supply chain due diligence requirements on companies placing the relevant commodities on the market. The principal requirements of the Regulation currently apply from 30 December 2024, subject to transitional provisions. For more information on the EUDR, see our blog post: Deforestation Regulation: EU imposes new due diligence duties on operators and traders. 

The EUDR is an important part of the EU's Green Deal. The Commission has argued that the Regulation is needed to end the EU's contribution to deforestation, which is a significant cause of climate change. According to the WWF, the EU is the world's second largest contributor to deforestation through its imports.

The publication of key delegated instruments and guidance/FAQs to be issued by the European Commission in advance of the EUDR’s foreseen entry into application faced delays and was eagerly awaited by in-scope companies to fine-tune their compliance programmes. In parallel, the Commission has been subject to significant pressure from within and outside the EU to delay, soften or withdraw the EUDR – though the Commission had, until yesterday, resisted these calls. 

Proposal to delay application of the EUDR and country benchmarking 

The legislative proposal would delay application of the EUDR by 12 months - from 30 December 2024 to 30 December 2025 for large in-scope companies and to 30 June 2026 for small and micro enterprises. Unless a delay is agreed before the end of the year, the EUDR will start to apply from 30 December this year.

The proposal also extends the date by which the Commission needs to adopt implementing acts classifying third countries as low, standard or high risk, until 30 June 2025.  The Commission has published the principles of the methodology it will apply to the EUDR country benchmarking exercise. The Commission's press release indicates that “a large majority of countries worldwide will be classified as low-risk”.

The Commission invites the European Parliament and the Council to adopt the proposal “by the end of the year”. The proposal is subject to the EU “ordinary legislative procedure" - which means the Parliament and Council first need to agree their respective negotiating positions before the “trilogues” (i.e. negotiations) can start. This does not leave the EU institutions much time before the end of the year - they will need to move very quickly indeed. 

The Commission has made it clear that “the extension proposal in no way puts into question the objectives or the substance of the law". Although the Commission's proposal only relates to the application dates and does not propose any other changes to the EUDR (for example, changes to scope, etc), it is possible that the Parliament or Council may try to propose other changes to the EUDR during the negotiations. However, at this stage, it is still too early to speculate whether that is likely to happen. 

It is worth noting though that the EU is currently in the process of appointing a new Commission (which is due to start work in early December at the earliest - see our previous blog post). So the current Commission, which is meant to be acting merely as a “caretaker”  at this stage, has taken the rather unusual step of submitting a legislative proposal to amend a very high-profile and controversial EU law. However, the reason for doing so is understandable as a number of EU Member States, third countries that are important trading partners, and companies had been pressing the Commission repeatedly for an urgent delay and changes to the EUDR (see Reuters press coverage here and here). 

Information System / Registry

The Commission has said that all the EUDR implementation tools are technically ready so the additional 12 months can serve as a “phasing-in period” to ensure proper implementation. 

The Commission's press release indicates that the Information System (aka the Deforestation Due Diligence Statement Registry) where businesses will register their due diligence statements is ready to start accepting registrations in early November 2024 and will be fully operational in December 2024. 

Operators and traders will be able to register and submit due diligence statements even before the law's entry into application and companies are invited to complete their connections, testing and training for the use of the IT System.

Guidance and FAQs

The guidance covers a very wide range of issues - including clarification on the meaning of “placing/making available on the market”, the definition of “operator”, the meaning of “negligible risk”, the meaning of “forest degradation”, guidance on traceability obligations, the interaction with the Corporate Sustainability Due Diligence Directive (CSDDD/CS3D), and the rules on third party certification and verification schemes - among other things.

NOTE ADDED ON 14/11/24: The final version of the guidance has now been published in the Official Journal of the EU - see here. Please this version of the guidance. 

The Commission has also published updated FAQs, with over 40 new additional answers (highlighted as “new” in the document). The FAQs are divided into nine main chapters, covering traceability, scope, subjects of obligations, key definitions, due diligence, country benchmarking and partnerships, supporting implementation, timelines, penalties and miscellaneous questions. 

Although these documents are important to assist companies in the drawing up of their compliance programmes, the Court of Justice of the European Union (CJEU) has stressed a number of times that it is the only body that can make final judgments on the interpretation of EU law, and that it is not bound by Commission’s guidance/FAQs.

For more information on the EUDR, see our blog post: Deforestation Regulation: EU imposes new due diligence duties on operators and traders.