EUDR compliance readiness: a short analysis of the updated version of “Frequently Asked Questions Implementation of the EU Deforestation Regulation”. The land data

Frequently Asked Questions Implementation of the EU Deforestation Regulation” provide with the approach about which to manage the land data.

What type of checks may EU Member States Competent Authorities carry out in third countries in case a product is deemed potentially non-compliant with the EUDR?

Competent Authorities may conduct field audits in third countries pursuant to Art. 18(2)(e) EUDR, provided that such third countries agree, through cooperation with the administrative authorities of those third countries.

It should be noted that the Regulation does not require the EU Member States’ Competent Authorities to consult producing countries if a product is assessed ‘potentially non-compliant’ or ‘non- compliant’.

Will Competent Authorities use the definitions in the Regulation?

In the context of the implementation of this Regulation, Competent Authorities of EU Member States will use the definitions set out in Art. 2 EUDR. A Regulation is a binding legislative act in the EU. It must be applied in a harmonized manner in its entirety in the 27 EU Member States.

What is supply chain traceability?

The information, documents and data which operators need to collect and keep for 5 years to demonstrate compliance with the Regulation are listed in Art. 9 and Annex II as well as in Art. 2(28) EUDR as regards data related to geolocation.

Operators must exercise due diligence with regard to all relevant products supplied by each particular supplier. Therefore, they must put in place a due diligence system, which includes the collection of information, data and documents needed to fulfil the requirements set out in Art. 9, risk assessment measures as described in Art. 10, and risk mitigation measures as referred to in Art. 11 EUDR. The requirements for the establishment and maintenance of due diligence systems, reporting and record keeping are listed in Art. 12 EUDR. In case of operators subject to simplified due diligence (Art. 13 EUDR), the operator’s due diligence system is limited to the operator’s simplified due diligence obligations (see also FAQ 5.1). The operators will have to communicate to downstream operators or to traders further down the supply chain the reference numbers of the due diligence statements or, if applicable, the declaration identifiers associated to products covered by a simplified declaration pursuant to Art. 4(7) EUDR.

Downstream operators and traders further down the supply chain ensure traceability by collecting and keeping information related to their direct business partners (suppliers and commercial clients). For obligations of downstream operators and traders see FAQ 3.4. Operators are required to ensure that the information on traceability that they supply to enforcing authorities in the Member States through the due diligence statement or simplified declaration submitted to the Information System is correct.

The development and functioning of the Information System will be in line with the relevant data protection provisions. In addition, the system will be equipped with security measures that will ensure the integrity and confidentiality of the information shared.

How will traceability work for products from multiple countries?  Operators are required to ensure that the required information on traceability that they supply to Competent Authorities in the Member States is correct, regardless of the length or the complexity of their supply chains.

Traceability information can be added up along supply chains. For instance, an imported large,bulk shipment of soy that has been sourced in several hundred plots of land from several countries would need to be associated with a due diligence statement that includes all relevant countries of production and geolocation information for every single plot of land from all of these countries that have contributed to the shipment.

What is the ‘date or time range of production’?

Operators are required to collect information on the date or time range of production under the obligations set out in Art. 9 EUDR. This information is needed to establish whether the relevant product is deforestation-free. That is why it applies to the commodities covered by the Regulation that are placed on the EU market or to the commodities that are used for the production of relevant products covered by the regulation.

For commodities other than cattle, the date of production refers to the date of harvesting of the commodities, and the time range of production refers to the period/duration of the production process (for instance, in the case of timber, “time range of production” would refer to the duration of the relevant harvesting operations). The date of production and the time range of production should both be related to the designated plots of land. If more precise information is not available, due to the specificities of the production, the crop year and/or harvesting season could be used. For relevant products under the commodity “cattle”, the time range of production refers to the lifetime of the animals from the moment the cattle were born until the time of slaughtering. If live cattle (HS Code 0102 21, 0102 29) are placed on the EU market (e.g., by importing or by the first selling of a cow after it was born in the EU), all geolocations (or postal addresses, if applicable) until the first placing on the EU market will have to be collected and submitted with the DDS or SD. To note that, according to Art. 1(2) EUDR, and in line with the definition of “produced” in Art. 2(14), the EUDR does not apply to cattle and cattle derived products if the cattle was born before the entry into force of the Regulation, i.e. before 29 June 2023.

How does compliance work in the cattle supply chain?

Just like for other relevant products, the natural or legal person who first places cattle on the market (whether living animals or processed meat) is an operator in the sense of Art. 2(15) EUDR. Prior to placing cattle on the EU market, they need to exercise due diligence and submit a due diligence statement according to Art. 4(1) EUDR. If the conditions outlined in Art. 2(15a) EUDR are met, the owner of the cattle may qualify as a micro or small primary operator, and therefore, prior to the placing of the cattle on the EU market, merely needs to submit a simplified declaration instead of a DDS. The cattle owner is not required to submit the simplified declaration if the Member State has made the required data available in the information system in accordance with Art. 4a(4) EUDR and, as a result, a declaration identifier has been assigned to the cattle owner. Every subsequent person selling cattle qualifies as a trader or a downstream operator. If the CN code remains the same (for example a fattening farm), they make the cattle available on the market in the sense of Art. 2(18) EUDR and are thus considered a trader. A person further down the supply chain processing live cattle into derived products included in Annex I, such as a piece of meat, qualifies as a downstream operator. Downstream operator and trader obligations vary depending on company size (see FAQ 3.4).

How should operators fulfil obligations related to “feed used for livestock”?

According to Recital 39 of Regulation (EU) 2023/1115, operators placing on the market or exporting relevant products that have been made using cattle should ensure, as part of their due diligence system, that the feed used for livestock is deforestation-free. However, no geolocation information should be required for the feed itself. The evidence may include relevant invoices, reference numbers of relevant due diligence statements or any other relevant documentation as evidence that the feed is deforestation-free. It should cover the lifetime of the animals, up to a maximum of five years. Taking into account that EUDR imposes requirements on relevant products, feed used for livestock is relevant under EUDR only if such feed is a relevant product at the time of being fed (e.g., HS 1208 10 – soya bean flour and meal). On the other hand, any other feed for cattle that is not a relevant product (for example grass) is not included in EUDR, so recital 39 of Regulation (EU) 2023/1115 about feed for cattle does not concern such other feed.  A DDS for the feed included in Annex I must be submitted only when it is placed on the market or exported in its own right.

What if upstream suppliers do not provide required information?

If an operator, downstream operator or a trader placing or making available a commodity on the EU market or exporting it is unable to obtain the information required by the Regulation from its suppliers, they must refrain from placing or making available the relevant products on the EU market or exporting them from the EU as that would result in a violation of the Regulation.

Should coordinates be provided for land in countries classified as low-risk?

There is no exception for the traceability requirement via geolocation (or, in the case of a micro or small primary operator, the postal address). The operators also have to assess the complexity of the relevant supply chain and the risk of circumvention of the Regulation and the risk of mixing with products of unknown origin or origin in high-risk or standard-risk countries or parts thereof (Art. 13 EUDR). If the operator obtains or is made aware of any relevant information that would point to a risk that the relevant products do not comply with the Regulation or that the Regulation is circumvented, the operator must fulfil all the obligations under Art. 10 and 11 EUDR and must immediately communicate any relevant information to the Competent Authority.

Does the legality requirement apply to deforestation-free land?

Relevant commodities cannot be made available on the EU market or exported from the EU unless they have been produced in accordance with the relevant legislation of the country of production pursuant to Art. 3(b) EUDR (the so-called “legality requirement”).

The obligations under Art. 3 are cumulative, meaning they all have to be fulfilled: (1) the legality requirement (Art. 3(b)), (2) the ‘deforestation-free’ requirement (Art. 3(a)) and (3) the requirement for the commodities or products to be covered by a due diligence statement or a simplified declaration (Art. 3(c) EUDR).

A commodity is harvested in country A and transported to country B for further manufacturing (e.g. cocoa beans from A are manufactured into cocoa powder in B) before the cocoa powder is placed on the EU market in country C. The laws applicable in which country are relevant?

In the given example, country A is the country of production, meaning the legality requirement only covers laws that are applicable in country A.

Are there legal obligations for non-EU countries?

There are no legal obligations applicable to non-EU countries. This Regulation sets out obligations for operators, downstream operators and traders (as described in chapter 2 of the Regulation) as well as for the EU Member States and their Competent Authorities (see chapter 3 of the Regulation). However, many countries around the world have taken action to enhance deforestation-free supply chains, strengthen public traceability systems on relevant commodities, etc., thereby facilitating the tasks of companies under this Regulation. This is welcome, as such developments can greatly help operators and traders to comply with their obligations.

How can producers share the geolocation data when certain governments prohibit the sharing of such data?

One of the core requirements for operators under this Regulation is to collect the geolocation information on the plot(s) of land where commodities and products placed on or exported from the EU market have been produced (Art. 9(1)(d) EUDR). Operators cannot rely on the existence of national laws prohibiting the sharing of such (public) data with operators in order to be exempt from the obligation to collect and upload that data into the Information System. Operators must submit the geolocation information as part of their obligations; otherwise, the operators cannot comply with the requirements on due diligence according to Art. 8 and, therefore cannot place on or export relevant products from the EU market.