No Match Found
This article was last updated 26 April 2023.
On 19 April 2023, the European Parliament approved the Regulation on deforestation-free products , which should curb EU-driven deforestation and forest degradation.
The proposed EU Regulation on deforestation-free products aims to minimise deforestation and forest degradation caused by EU consumption and production and to enlarge the demand on the EU market for deforestation-free products. The original proposal (COM/2021/706) applied to cattle, palm oil, soy, cocoa, coffee and wood and related products (e.g. beef and paper), which are considered to be the main drivers of deforestation. This scope has been extended to include rubber, charcoal, printed paper products and some palm oil derivatives. In the future, the scope could be expanded further to include other products or other ecosystems, as savannas and marshes.
The cornerstone of the proposed Regulation is that the commodities/products in scope may be placed or made available on the EU market or exported from the EU market only when:
they did not cause deforestation or forest degradation;
they have been produced in accordance with the relevant legislation of the country of production (legally produced); and
they are covered by a due diligence statement.
In the preliminary agreement, the definition of ‘forest degradation’ has been extended to include the conversion of primary forests or naturally regenerating forests into plantation forests or into other wooded land and the conversion of primary forests into planted forests.
Companies have to demonstrate that their goods are legally produced and deforestation-free following mandatory due diligence rules. The due diligence procedure includes the obligation that companies collect information on the geographic location of where the relevant commodities/products were produced. As the European Parliament proposed, companies will also be required to carry out due diligence on the protection of human rights and rights of indigenous people in the production process. Furthermore, processes to manage and mitigate the risk of non-compliance should be established, including for large companies an independent audit function and the appointment of a compliance officer.
The exact due diligence obligations depend on a benchmarking system of the European Commission to assess countries and their level of risk of deforestation and forest degradation driven by the commodities in the scope of the Regulation. A deforestation-free good should be produced on land that has not been subject to deforestation or forest degradation after 31 December 2020 (the so-called cut-off date).
To enforce the proposed Regulation, certain minimum inspection standards are set for competent authorities, linked to the benchmarking system. 1% to 9% of the operators must be checked, and for high risk countries, also 9% of total volumes must be checked. Certain procedures for customs authorities apply, for example the verification of the status of the due diligence statement. The Regulation further introduces a complaint procedure for third parties and certain measures to enhance cooperation and information sharing among authorities.
In case of non-compliance with the Regulation, the operator is required to take appropriate corrective action. Member States must implement penalties, including at least fines, confiscation of commodities/products and related revenues and temporary exclusion from public tenders.
The Regulation implies extensive obligations for companies trading in (products related to) cattle, palm oil, soy, cocoa, coffee, rubber, charcoal and wood. Despite the proposal status of the Regulation, it is recommended that such companies take measures to prepare for these future obligations, for example the identification of the commodities/products in scope of this Regulation. Enforcement authorities (e.g. NVWA, customs) should also start preparing.
The proposal now has to be formally endorsed by the European Council.. The regulation will enter into force 20 days after its publication in the EU Official Journal. A transition period of 18 months applies, and 24 months for micro and small companies.
Within one year of entry into force, an evaluation will be made as to whether the scope should be expanded to other wooded land. Within two years, it will be evaluated whether the scope should be extended to other ecosystems and goods and whether obligations should be introduced for financial institutions.