Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation.
Conditions
In order to be distributed, consumed or used in the EU, or exported, relevant commodities and products must be:
Deforestation-free
Produced legally
Accompanied by a due diligence statement.
The relevant commodities are cattle, cocoa, coffee, oil palm, rubber, soya and wood. The Commission will present an impact assessment, and if appropriate, a legislative proposal to extend the scope of this Regulation to other wooded land by June 30, 2024, and to other natural ecosystems (such as land with high carbon stocks and high biodiversity value) by June 30, 2025.
To be produced legally, the relevant commodities and products must comply with laws in the producer country governing issues such as land use, environmental protection, forest management, biodiversity conservation, labour rights, human rights, the principle of free, prior and informed consent (FPIC), and tax, anti-corruption, trade and customs regulations.
Who does What?
An operator is any natural or legal person who places relevant products on the EU market or exports them. The operator must:
Conduct due diligence
Submit a due diligence statement that no or only a negligible risk was identified
The reference number of the due diligence statement must be provided to customs authorities before the release for free circulation or export of a relevant product entering or leaving the market.
SME operators will not have to conduct due diligence for relevant products made with relevant products already covered by a due diligence statement. If requested by a competent authority, the SME can simply quote the reference number of the original due diligence statement. If, however, parts of the relevant product have not been subject to due diligence, the SME operator will still have to conduct due diligence.
Non-SME operators using products already covered by a due diligence statement must still make a due diligence submission but may quote the reference number of the original due diligence statement after satisfying themselves that the original due diligence was properly exercised. If the original due diligence did not cover the entire product, the non-SME operator must conduct due diligence on the rest.
Operators relying on a prior due diligence submission are nevertheless still responsible for the compliance of the relevant products.
A trader is any person in the supply chain (other than the operator) who makes relevant products available on the EU market.
Non-SME traders are subject to the same obligations as non-SME operators listed above.
SME traders must collect and retain for five years information about the operators or traders they worked with when placing relevant product on the EU market, as well as the reference number of the pertinent due diligence statement(s). This information must be made available to competent authorities upon request.
Operators and traders that receive information indicating that a relevant product they placed on the market may not be compliant shall immediately inform the competent authorities and traders to whom they supplied the relevant product.
Operators or traders may mandate an authorised representative to submit the due diligence statement on their behalf but remain responsible for the compliance of the relevant product. A sole proprietor or microenterprise may mandate the next operator or trader along the supply chain to act on their behalf.
If a natural or legal person based outside the EU places a relevant product on the market, the first EU-based entity placing that product on the market is taken to be the operator.
What is Due Diligence?
The following information must be collected by operators and traders, kept for five years, and made available to competent authorities upon request:
The common and scientific names of the species used to make any wood product
The product description must list the relevant commodities or products contained in or used to make it
The quantity (net mass in Kg’s) of the relevant products
The producer country
The geolocation of all plots of land larger than four hectares used to produce the relevant commodities used in the relevant product
The date or time range of production
In the case of cattle and animals the geolocation of all sites where they have been kept
The name, postal address and email address of any supplier the operator sourced relevant products from, and of any business, operator or trader that the operator provided relevant products to
Sufficiently conclusive and verifiable information that the relevant products are deforestation-free and legally compliant.
Operators and traders must then use this information to assess the risk of non-compliance. Only product that contains no, or only negligible risk of non-compliance may be placed on the market or exported.
The risk assessment must take account of the following factors:
The risk category of the country (low, standard, high)
Forests
The presence of Indigenous People
Good faith consultation and cooperation with Indigenous People
Claims by Indigenous People regarding the use or ownership of the area used to produce the relevant commodity or product
Deforestation or forest degradation in the area
Governance issues such as corruption, document and data falsification, absence of law enforcement, human rights violations, armed conflict or international sanctions
Supply chain transparency and traceability
Possible links to deforestation and degradation
Company and product non-compliance risks
Information from certification and monitoring schemes.
The risk assessment should be reviewed annually and made available to competent authorities upon request, along with information about how the information was used and risks determined.
Unless there is no, or only negligible risk of non-compliance operators and traders must take measures to mitigate risk, including:
Survey and audits
Capacity building and investments
Policies, controls and procedures to manage the risks
Operators and traders (except MSMEs) must publish an annual report on their due diligence system and activities, including:
Details of their traceability and transparency efforts
Conclusions of their risk assessment
A description of their consultations with indigenous peoples, local communities, customary tenure rights holders, civil society organisations.
What must Member States do?
Member States and their competent authorities must conduct checks to establish whether operators and traders are complying with the regulation. Those checks should be based on risk indicators, including:
Commodity risk
The complexity and length of supply chains
The proximity of plots of land to forests
The history of non-compliance of operators or traders
Likelihood of circumvention.
Each Member State shall ensure that the annual checks carried out by its competent authorities cover at least 1% of the operators and traders marketing relevant products using relevant commodities produced in a country classified as low risk. In standard risk countries that rises to 3%, and in high-risk countries to 9% of the operators and 9% of the quantity of each of the relevant products. Checks should also be conducted when information or complaints regarding possible non-compliance are received. Checks should be unannounced unless prior notice is required to ensure effectiveness. The records of checks and their results shall be made available upon request.
Checks on operators and non-SME traders should include:
Their due diligence system
Documentary evidence of compliance
Scientific means such as anatomical, chemical or DNA analysis to establish species or location
Technical and scientific means to determine whether the relevant commodities or products are deforestation-free
In-country spot checks and audits.
Member States must report to the public and the Commission by April 30 each year. This shall include:
The planning of checks and risk criteria used
The actual number and results of the checks on operators, non-SME traders and other traders
The quantity of relevant products checked
The actions taken to correct non-compliance and penalties imposed
The percentage of checks with prior notice, and the justification for such.
The Commission will use the reports by Member States to issue a public report on the enforcement of the Regulation by October 30 each year.
When a competent authority establishes that an operator or trader has marketed or exported a non-compliant commodity or product, they may order appropriate and proportionate corrective action, including:
Preventing the marketing of the relevant product, or withdrawing or recalling it immediately
Donating or destroying the product
Strengthening their due diligence system.
Member States must adopt rules on effective, proportionate and dissuasive penalties for non-compliance with the Regulation. These may include:
A fine of up to 4% of the operator’s or trader’s total annual Union-wide turnover in the financial year preceding the fine
Seizure of the relevant products
Confiscation of revenues from a transaction with a non-compliant product
Temporary exclusion from public procuremen
Temporary prohibition from marketing or exporting a relevant commodity or product.
Member States must notify the Commission of penalties issued and the Commission will publish a list with the name of the legal entity, a summary of the non-compliant activities and the penalty imposed.
The Regulation classifies Member States and third countries, or parts thereof, into one of the following risk categories:
Low risk – instances of non-compliance are exceptional
Standard risk – neither low nor high risk
High risk – significant risk of non-compliance.
The European Commission shall adopt implementing acts to publish the list of the countries or parts thereof, that present a low or high risk using primarily the following assessment criteria:
Rate of deforestation and forest degradation
Rate of expansion of agricultural land for relevant commodities
Production trends of relevant commodities and products.
What must the Commission do?
The Commission will develop an electronic interface based on the European Union Single Window Environment for Customs, to enable:
Operators and traders to submit due diligence statements of a relevant commodity or product through the national single window environment for customs and receive feedback from competent authorities
The transmission of due diligence statements to the information system to be established for this purpose by the end of 2024.
That information system will:
Register operators and traders and their authorised representatives
Register due diligence statements and provide a reference number
Register the outcome of checks on due diligence statements
Interface with customs through the European Union Single Window Environment for Customs
Provide information to support the risk-profiling of operators and traders for checking
Facilitate cooperation and data exchange between competent authorities, and between them and the Commission
Provide public access to anonymised datasets to ensure interoperability, re-use and accessibility.
The Commission will engage with producer countries inter alia on:
Conservation, restoration and sustainable use of forests
Deforestation
Forest degradation
Forest and biodiversity conservation
Enhanced governance of forests
Integrated land use planning processes
Tenure security
Agriculture productivity and competitiveness
Supply chain transparency
The rights of forest-dependent communities, including smallholders, local communities, and indigenous peoples
The transition to sustainable commodity production, consumption, processing, and trade methods
Legal and governance reform.
Access to Remedy
Natural or legal persons can register substantiated concerns with competent authorities regarding non-compliance by one or more operators or traders. The competent authorities must assess and verify the concern timeously and may take interim measures to prevent the marketing or export of relevant products under investigation. The competent authority must inform the complainant within 30 days of the follow-up measures taken.
Depending on the national legal system in force, complainants may have access to administrative or judicial procedures to review the legality of the decisions, acts or omissions of the competent authorities.