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The new Regulation will require companies importing or exporting the impacted commodities from the EU to prove the products are deforestation-free. This is defined the same way as in the EUTR – ‘the product itself, its ingredients or its derivatives were not produced on land subject to deforestation or forest degradation’.
Operators (companies who first place products in the single market) will be required to implement the due diligence requirement on their supply chains to ensure they are deforestation and forest-degradation-free, while traders will be responsible for storing and sharing information on their supply chain to operators.
The European Commission (EC) will conduct risk assessments by country. The EC information system will list countries as low, standard, or high risk. For products from low-risk countries, a simplified due diligence process is applied which includes an exemption from risk analysis and mitigation measures.
Potential sanctions include:
Whether they do it themselves or via expert third parties, companies wishing to import or export in scope products will be required to perform proper due diligence. EUDR suggests including the following steps:
A Due Diligence Statement (DDS) must be produced and uploaded onto the European Commission Information System, expected to go live in December. Doing so, allows the EC to ensure compliance and provide compliant products with a reference code. Without an approved DDS reference code, products may be held at customs causing delays to the supply of goods.