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Rescheduling of the EU Deforestation Regulation and New Guidance Documents
On October 2, 2024, the European Commission (the "Commission") proposed an extra 12 months of phasing-in time for the application of the EU Deforestation Regulation ("EUDR"), one of the EU's measures to combat climate change. While the European Council signed off on the Commission's proposal on October 16, 2024, the European Parliament agreed to the delay but asked for additional changes to the EUDR, including inter alia, the creation of a fourth "no risk" categorization, on November 14, 2024. The text will now return to interinstitutional negotiations. If finally endorsed, the proposal would make the EUDR applicable on December 30, 2025, for large companies and June 30, 2026, for micro- and small enterprises.
Further, the Commission published a third version of its FAQs on the EUDR, which provide valuable insights into some of the concerns raised by stakeholders. For example, the FAQs provide that in the case of composite products, the operator will need to conduct due diligence only on the main commodity and derived products deemed relevant under the EUDR (i.e., the commodity contained in the left column of Annex I of the EUDR). For example, for chocolate bars, only the cocoa powder and cocoa butter under the commodity cocoa would be covered, but not palm oil if included in the ingredients of the product.
The FAQs also specify that operators and traders cannot rely on the existence of national laws prohibiting the sharing of geolocation information in order to be exempt from the obligation to collect and upload that data into the Information System, yet provide no guidance for how to address compliance with conflicting requirements. The Commission has stated that the Information System, which is the IT platform for operators and traders to submit due diligence statements, will be launched by mid-December 2024, and registration will open in November 2024.
The FAQs further provide details on the definitions of traders and operators, the requirements for submitting a due diligence statement covering multiple physical batches/shipments, as well as the penalties for noncompliance with the EUDR.
The Commission also published a guidance document and the principles of the methodology that it will apply to the benchmarking procedure, which classifies countries into low, standard, or high-risk categories based on their level of deforestation risk. The Commission stated that it aims at finalizing this benchmarking by June 30, 2025. According to the European Parliament, the Commission further promised the publication of a revised guidance document and a new set of FAQs before the end of 2024.
