The new "Deforestation" Regulation – Part 2

In recent years, several regulations have been introduced as part of the EU's "Green Deal," which have had far-reaching effects on the Trade & Customs Compliance landscape.

You might still be dealing with the impact of the CBAM (Carbon Border Adjustment Mechanism) regulation, and now the next piece of legislation, set to come into effect at the end of 2024, is already on the horizon. This regulation specifically addresses the prevention of deforestation. This article is a follow-up to a previous newsletter article.

What does Deforestation mean in this context?

The goal of this regulation is to ensure that our products are produced in a "deforestation-free" manner. This means that no net loss of trees occurs during the production process. For every tree felled, at least one must be planted in its place. The exact definition of deforestation-free used in the regulation is as follows:

  • a) The relevant goods contain, are fed with, or are manufactured using relevant raw materials produced in areas where no deforestation has taken place after December 31, 2020, and;
  • b) In the case of relevant products that contain or are made with wood, the wood was harvested from forests without causing forest degradation after December 31, 2020.

Which goods are affected by this regulation?

For now, the Deforestation regulation is limited to:

  • Palm Oil
  • Soy
  • Cocoa
  • Cattle
  • Coffee
  • Rubber
  • Wood

The regulation also applies to products derived from these primary categories, such as chocolate bars, leather belts, etc. It's important to note that this applies to both imports and exports.

Additional requirements

The rules will take effect on December 30, 2024, and prohibit the import or export of the above-mentioned products to or from the EU, unless:

  • The goods are deforestation-free;
  • They are produced in compliance with local laws (in the country of origin), which must be interpreted broadly;
  • A Due Diligence statement has been prepared. This statement includes a risk analysis and assessment to determine whether the products comply with the regulation. If the risk is minimal, the product may be placed on the internal market (or traded).

The regulation is initially aimed at large companies and does not yet affect SMEs. SMEs will be impacted starting in June 2025. The European Commission will use the next two years to evaluate the system and has already announced that this regulation will not be limited to these products.

For more information about this regulation and how it may affect your business, feel free to contact us.

11 Sep 2024 at 8:34 pm
5 min
Published by:
Steven Sewberath Misser
Sr. Customs Specialist
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