Agreement about EU Deforestation Regulation

Proposed measures

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.