Last week, the European Parliament adopted a motion that confirms the one-year delay in the Regulation’s application proposed by the European Commission and approved by the EU Council last month (1). However, the MEPs also passed a new amendment establishing a ‘no-risk’ country category. The fate of this amendment, along with the one-year delay, now hinges on the “trilogue” negotiations between the EU Council, the European Parliament, and the European Commission. These interinstitutional discussions will shape the final form of the EUDR.
Implications of the “No-Risk” Country Status
The new “no-risk” country designation implies that products originating from these territories would face significantly less stringent administrative scrutiny and regulatory requirements. The “no-risk” status would be based on the recognition that these countries have a stable or increasing forest area development (2), and therefore a lower risk of forest loss. The new amendment provides that the compliance obligations are notably simplified for companies sourcing from “no-risk” countries. They will only need to meet certain documentation requirements for EUDR compliance, including the following:
- product details,
- production origins,
- supplier and recipient information, and
- adequately conclusive and verifiable information that the products are free from forest degradation and have been produced in accordance with the relevant legislation of the country of production.
It is important to note that the simplified information requirements for ‘no-risk’ operators require identifying the country of origin rather than the specific polygon. This substantially reduces the complexity of traceability for operators, traders, and the EU Information System.
For businesses sourcing from “no-risk”regions, this could mean fewer compliance formalities and a potential reduction in operational costs, but not lower responsibility in case an issue emerges nevertheless. The Commission should be finalizing the country benchmarking by 30 June 2025.
Next Steps
The EUDR amendment proposal will now move back to interinstitutional trilogue negotiations among the Parliament, the Council, and the Commission. For the changes and the delay to take effect, the agreed text must receive endorsement from both the Council and Parliament, followed by its publication in the EU Official Journal.
Conclusion
Amidst the ongoing political debates on the EUDR, the one thing that remains clear is that companies must comply with the EUDR because it will eventually come into force. The grace period of one year should be effectively used for a cost effective EUDR implementation, as focus effort does not happen overnight. In addition, other European rules are tackling the very same supply chains, and also are at the doorstep of your company. Integrating compliance in a smart way, is the only way to go.
For further insights and updates on the EUDR and its implications for your business, please join our third webinar on EU Deforestation Regulation which will take place on Friday, 29th November 2024 from 2 to 3pm CEST: https://www.pwc.be/en/events-courses/2024/EUDR-3.html or reach out to Giovanni Gijsels, Christoph Vanderstricht, Tom Wallyn, Marvin Yabili, or Caroline Schmidt.
(1) https://news.pwc.be/eudr-eu-council-agrees-to-extend-application-timeline/
(2) https://www.europarl.europa.eu/news/en/press-room/20241111IPR25340/eu-deforestation-law-parliament-wants-to-give-companies-one-more-year-to-comply#:~:text=The%20deforestation%20regulation%2C%20adopted%20by,rubber%2C%20charcoal%20and%20printed%20paper.
