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EUROPEAN COMMISSION Brussels, 17.11.2021 COM2021 706 final 20210366 COD Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the making available on the Union market as well as export from the Union of certain commodities and products associated with deforestation and forest degradation and repealing Regulation EU No 9952010 Text with EEA relevance SEC2021 395 final - SEC2021 396 final - SWD2021 325 final - SWD2021 326 final - SWD2021 327 final - SWD2021 328 final - SWD2021 329 final
EXPLANATORY MEMORANDUM
1. CONTEXT OF THE PROPOSAL
Reasons for and objectives of the proposal
Deforestation and forest degradation are occurring at an alarming rate, aggravating climate
change and the loss of biodiversity. The main driver of deforestation and forest degradation is
the expansion of agricultural land to produce commodities such as cattle, wood, palm oil,
soy, cocoa or coffee. A growing world population and increasing demand for agricultural
products especially those of animal origin is expected to increase demand for agricultural land
and put additional pressure on forests, while changing climate patterns will affect food
production, necessitating a shift to a sustainable production that is not leading to further
deforestation and forest degradation. The EU is a relevant consumer of commodities associated with deforestation and forest
degradation and it lacks specific and effective rules to reduce its contribution to these
phenomena. The objective of this initiative is therefore to curb deforestation and forest
degradation that is provoked by EU consumption and production. This, in turn, is expected to
reduce GHG emissions and global biodiversity loss. The initiative aims to minimise
consumption of products coming from supply chains associated with deforestation or
forest degradation and increase EU demand for and trade in legal and deforestation free
commodities and products. Consistency with existing policy provisions in the policy area
the Worlds Forests1
to Protect and Restore
The proposal was first announced in the 2019 Commission Communication on Stepping up
EU Action
hereinafter 2019
Communication, where the Commission committed to assess additional demand side
regulatory and non-regulatory measures to ensure a level playing field and a common
understanding of deforestation free supply chains, in order to increase supply chain
transparency and minimise the risk of deforestation and forest degradation associated with
commodity imports in the EU. This commitment was then confirmed in the European Green
Deal,2 as well as the 2030 EU Biodiversity Strategy3 and the Farm to Fork Strategy4, the latter
two announcing a corresponding legislative proposal in 2021. The proposal is an integral part
of and coherent with the overall objectives of the European Green Deal and all the initiatives
developed thereunder. In particular, it is complementary with the other measures proposed in
the 2019 Communication, notably 1 work in partnership with producer countries, to
address root causes of deforestation, and to promote sustainable forest management, and 2
international cooperation with major consumer countries, to minimise leakage and to
promote the adoption of similar measures to avoid products coming from supply chains
associated with deforestation and forest degradation being placed on the market. 1
Communication from the Commission to the European Parliament, the Council, the European,
Economic and Social Committee and the Committee of the Regions, Stepping up EU Action to Protect and
Restore the Worlds Forests, COM2019352 final. 2
Communication from the Commission to the European Parliament, the Council, the European,
Economic and Social Committee and the Committee of the Regions, The European Green Deal, COM2019640
final. 3
Communication from the Commission to the European Parliament, the Council, the European,
Economic and Social Committee and the Committee of the Regions, EU Biodiversity Strategy for 2030 Bringing
nature back into our lives, COM2020380 final.
4
Communication from the Commission to the European Parliament, the Council, the European,
Economic and Social Committee and the Committee of the Regions, A Farm to Fork Strategy for a fair, healthy
and environmentally-friendly food system, COM2020381 final. EN
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The Commission will therefore continue to work in partnership with producer countries,
offering new types of support and incentives with regard to protecting forests, improving
governance and land tenure, increasing law enforcement and promoting sustainable forest
management, climate-resilient agriculture, sustainable intensification and diversification,
agro-ecology and agroforestry. The existing EU legislative framework addresses deforestation only partially. The EU Forest
Law Enforcement Governance and Trade FLEGT Action Plan dating from 20035
constitutes the key EU policy against illegal logging and associated trade. While the FLEGT
Action Plan tackles illegal logging and associated trade, it does not address deforestation
as such. A key element of the FLEGT Action Plan is a voluntary scheme to ensure that only
legally harvested timber is imported into the EU from countries agreeing to take part in this
scheme. The internal EU legal framework for this scheme is the Forest Law Enforcement,
Governance and Trade Regulation FLEGT Regulation6, which establishes a licensing
system that is the basis for FLEGT Voluntary Partnership Agreements. Another key element
of the FLEGT Action Plan is the EU Timber Regulation EUTR7, which prohibits the
placing of illegally harvested timber and timber products on the EU market and lays down
obligations for operators placing timber on the market for the first time. Both the FLEGT
Regulation and EUTR have undergone a Fitness Check, and the policy options presented in
this Regulation are also drawing from the findings of the Fitness Check. Building upon the experience and lessons learned in the context of the FLEGT Action Plan
and Regulation, the Commission will establish forest partnerships with relevant partner
countries as appropriate. The Forest Partnerships main objective will be to protect, restore
andor ensure the sustainable use of forest in a comprehensive and integrated way to deliver
on the European Green Deal priorities as well as EUs development cooperation objectives
like poverty alleviation, good governance, human rights. They will promote forest governance
and policy reforms to pursue sustainable forest management and contribute to halting
deforestation and forest degradation. Consistency with other Union policies
The 2019 Communication sets out the overall objective of protecting and improving the
health of existing forests, in particular primary forests, and to increase sustainable, biodiverse
forest coverage worldwide. In the context of the European Green Deal, both the EU
Biodiversity Strategy for 2030 and the Farm to Fork Strategy characterise this legislative
proposal and other measures to avoid or minimise the placing of products coming from supply
chains associated with deforestation or forest degradation on the EU market, as important for
the achievement of their objectives. Other relevant initiatives include, for instance, the
Communication A long-term Vision for the EUs Rural Areas8. The new EU Forest Strategy confirms that the measures already identified in the 2019
Communication set the basic framework for the EUs global action, including the present
Council Regulation EC No 21732005 of 20 December 2005 on the establishment of a FLEGT
Communication from the Commission to the Council and the European Parliament - Forest Law
5
Enforcement, Governance and Trade FLEGT - Proposal for an EU Action Plan COM2003 251 final. 6
licensing scheme for imports of timber into the European Community
7
laying down the obligations of operators who place timber and timber products on the market. 8
Communication from the Commission to the European Parliament, the Council, the European Council,
The European Economic and Social Committee and the Committee of the Regions, A long-term Vision for the
EUs Rural Areas - Towards stronger, connected, resilient and prosperous rural areas by 2040, COM 2021
345 final.
Regulation EU No 9952010 of the European Parliament and of the Council of 20 October 2010
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legislative initiative, and will be properly and consistently taken into consideration when
shaping domestic policies. This Regulation will be complementary with the legislative initiative on Sustainable
Corporate Governance SCG, which aims to improve the EU regulatory framework on
company law and corporate governance. The SCG initiative is based on a horizontal approach
addressing adverse human rights and environmental impacts acting upon the behaviour of
companies in their own operations and in their value chains. While the SCG regime will
address business operations and value chains in general, the deforestation approach is
focusing on specific products and product supply chains. Therefore, while the overall
objectives of the two initiatives may be shared and are mutually supportive, specific
objectives are different. The SCG initiatives due diligence obligation is planned to apply to a range of large EU
companies across sectors with a more targeted regime for certain medium-sized companies,
and non-EU companies are planned to be covered as well. The legislative initiative on
deforestation has a very specific objective to limit the placing of deforestation-linked products
on the EU market and its requirements will, in some areas, be more specific compared to the
general duties under the SCG initiative. It also includes a prohibition, which will apply to all
operators placing the relevant products on the market, including EU and non-EU companies,
irrespective of their legal form and size. Where the requirements of the SCG initiative go
beyond the requirements of the deforestation regulation, they apply in conjunction. The present initiative will not specifically target the financial sector and investments. Existing initiatives in the area of sustainable finance, such as the implementation of the EU
Taxonomy Regulation and the future Corporate Sustainability Reporting Directive, CSRD
current Non-Financial Reporting Directive, NFRD are well suited to address the
deforestation impacts of the finance and investment sectors, thereby complementing and
supporting this legislative initiative on deforestation. The CSRD and taxonomy impose disclosure obligations also on non-financial undertakings
the CSRD foresees the publication of sectoral reporting standards by October 2023 under the
EU Taxonomy Regulation, technical criteria have already been established under the
delegated act for climate mitigation and adaptation for forestry, while the publication of
criteria for agriculture has been delayed. Both economic activities can be covered under the
delegated acts for the other four environmental objectives. This Regulation proposal is also expected to be applied together with the Renewable Energy
Directive9 as regards some commodities used as biofuels or to produce biofuels, such as wood
pellets or derivatives of soy and palm oil. The objectives of the two sets of EU rules are
complementary, as they both address the overarching objectives of fighting climate change
and biodiversity loss. This legislative initiative sets requirements for commodities and
products linked to deforestation and forest degradation to be placed on the EU market, with
the aim of curbing EU-driven deforestation.
The Renewable Energy Directive sets, among
others, sustainability criteria rules for biofuels, bioliquids and biomass to be considered
sustainable and specifies targets for the EU to achieve a renewable energy target of at least
32 by 2030. 9
promotion of the use of energy from renewable sources, OJ L 32882 of 21.12.2018, p. 82209. Directive EU 20182001 of the European Parliament and of the Council of 11 December 2018 on the
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As regards their practical interplay, commodities and products that fall within the scope of
both acts will be subject to requirements for general market access and for being accounted
for as renewable energy. These requirements are compatible and mutually reinforcing. In the
specific case of certification systems for low Indirect Land Use Change ILUC according to
Commission Regulation EU 2019807 supplementing Directive EU 2018200110, as
regards the determination of high indirect land-use change-risk feedstock for which a
significant expansion of the production area into land with high carbon stock is observed and
the certification of low indirect land use change-risk biofuels, bioliquids and biomass fuels,
these certification systems may also be used by operators and traders within their due
diligence systems to obtain information as required by this Regulation to meet some of the
traceability and information requirements set out in Article 9 of this Regulation. As with any
other certification system, their use is without prejudice to the legal responsibility and
obligations under this Regulation for operators and traders to exercise due diligence.
Article 192 1 TFEU states that the European Parliament and the Council, acting in
accordance with the ordinary legislative procedure and after consulting the Economic and
Social Committee and the Committee of the Regions, shall decide what action is to be taken
by the Union in order to achieve the objectives referred to in Article 191. 10
Commission Delegated Regulation EU 2019807 of 13 March 2019 supplementing Directive EU
20182001 of the European Parliament and of the Council as regards the determination of high indirect land-use
change-risk feedstock for which a significant expansion of the production area into land with high carbon stock
is observed and the certification of low indirect land-use change-risk biofuels, bioliquids and biomass fuels OJ
L 133, 21.5.2019, p.
17. EN
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Subsidiarity for non-exclusive competence
The main drivers of deforestation and forest degradation are linked to both the EU market and
international trade. Action at EU level is required to address the EU consumption footprint
and international trade issues in a coordinated and harmonised way while providing the legal
certainty and clarity, necessary for the proper functioning of the EU market. In the absence of
a harmonised approach, measures restricting internal trade would be taken by several Member
States, hence disrupting the functioning of the internal market. This would have a serious
impact on the functioning of the EU market, jeopardize the ability of European operators to
source productscommodities in the scope of this Regulation as well as undermine the
credibility of EU measures. Other Member States might decide not to adopt any measure
limiting the potential impact of the measures undertaken by others on deforestation. The supply chains for the products covered by the initiative are international and very often
global. The EU experience in dealing with complex supply-chain issues e.g. stemming from
the illegal logging related legislation shows that it is instrumental to ensure a level playing
field for operators in terms of requirements to be met before placing products commodities
and derived products on the EU market for the first time. The absence of applicable rules at the European level puts responsible business operators that
are ready to clean up their supply chains at a competitive disadvantage and rewards
unsustainable behaviour. Therefore, while environment is a competence shared between the
EU and the Member States, EU-wide measures are necessary to ensure a common
understanding of deforestation and forest degradation-free supply chains, to increase the
transparency of such supply chains as well as to allow, by the scale of the action, a significant
impact on deforestation. In so far as the present initiative covers both goods released for free circulation or exported
from the Union market, action at Union level would be more effective than action at national
level as it would prevent possible adverse impact on the functioning of the internal market and
on trade aspects. EU action can therefore complement and strengthen national efforts of
Member States. Were the EU not to act, the problem of deforestation and forest degradation
related to EU consumption would persist and further deteriorate. This could negatively affect
the EUs efforts in the field of global biodiversity protection and climate change. Proportionality
With this legislative initiative the EU steps up its action against deforestation and forest
degradation by establishing a regulatory framework which aims to be ambitious and
implementable, and which incentivises the transition to sustainable supply chains in all
producing countries, within or beyond the EU. This would make the EU a credible global
standard-setter. The minimum monetised benefits clearly offset the costs. The initiative is also
in line with the gravity and urgency of the problem it aims to tackle, as well as with the
priorities of the European Green Deal. This legislative initiative aims at minimising the EUs contribution to deforestation and forest
degradation. This objective will be achieved by establishing a tiered, mandatory due diligence
system, relying on a deforestation-free definition, combined with a benchmarking system. As
analysed in the Impact Assessment related to minimizing the risk of deforestation and forest
degradation associated with products placed on the EU market hereinafter Impact
Assessment, it is expected that these measures will be the most effective in curbing EU-
driven deforestation and the most efficient among those screened in preparation of this
initiative. The findings of the Impact Assessment, demonstrate that legally binding options
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like deforestation-free requirement, mandatory due diligence, etc. would be more effective
than voluntary measures like voluntary due diligence, voluntary labelling or voluntary
private certification.
These findings were corroborated by the outcome of the Open Public
Consultation, where the overwhelming majority of stakeholders businesses associations
and NGOs supported a mandatory due diligence regime. Choice of the instrument
The proposed instrument is a Regulation because it is necessary to ensure the highest level
of harmonization to avoid the coexistence of different standards between Member States,
which would undermine the fundamental principle of free movement of goods. A Regulation
will set direct requirements for all operators, thus providing the necessary legal certainty
and enforcement possibility of a fully integrated market across the EU. A Regulation also
ensures that the obligations are implemented at the same time and in the same way in all
27 Member States. The Regulation will also reduce uncertainties over timelines during the
transposition process typically associated with a Directive in an area where time and legal
certainty are critically important due to forecasted increases in market size and changes in
market dynamics more generally. The instrument has also been designed as a future-proof dynamic system to be able to adapt
to market developments and new data and scientific evidence. For this purpose, a number
of empowerments are foreseen for the Commission, which will allow the development of
implementing measures, among others to publish the result of the country benchmarking and
to revise the commodities in scope of the Regulation. 3. RESULTS
CONSULTATIONS AND IMPACT ASSESSMENTS
EX-POST
EVALUATIONS,
OF
STAKEHOLDER
Ex-post evaluationsfitness checks of existing legislation
The present initiative builds on the findings of the Fitness Check of the EUTR and FLEGT
Regulations, which has been carried out concomitantly to the Impact Assessment for this
Regulation. With regard to the EUTR, the Fitness check has shown that the EUTR resulted in an improved
situation in third countries, including in countries that have chosen not to engage in VPA
processes. Main EU trade partners have taken steps to strengthen their forest governance
systems and reduce illegal logging to meet the requirements of the EUTR. The EUTR even
if hampered by a number of weaknesses in its design and enforcement challenges has shown
some positive results in terms of both effectiveness and efficiency. Its worldwide coverage
has provided the EU with a basis to work closely together with other consumer countries. Other consumer countries and trade partners worldwide have adopted legislative approaches
similar to the EUTR In the broader deforestation context, this is particularly important to bear
in mind, as it shows that the EU, even with a decreasing market share, can have an impact and
lead the way globally. Despite the challenges experienced in its implementation, the findings of the Fitness Check
show that the approach adopted for the EUTR due diligence allows flexibility to respond
to new and emerging challenges linked to illegal logging and illegal land use change. The
general requirement due diligence placed on all EU based operators also allows the
Regulation to be flexible to changes in trade patterns and changes in country risk profiles. The
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proposed option will integrate and improve upon the framework set up with the EUTR, which
would therefore be repealed.
The Due Diligence procedure set up under the EUTR will be adapted and improved in the
present Regulation, through the introduction of new features such as the due diligence
statement Article 4, the geographic information requirement or geo-location, linking the
commodities and products to the plot of land where they were produced article 9, increased
cooperation with customs Articles 14 and 24, minimum inspection levels article 14 as well
as the country benchmarking Articles 25-26. With regard to the FLEGT Regulation, the Fitness Check has confirmed the achievements of
FLEGT Voluntary Partnership Agreements VPAs in terms of enhanced stakeholders
participation and improved forest governance frameworks in partner countries and, at the
same time, highlighted a number of its shortcomings.
It has also pointed out that there is
limited evidence that the VPAs overall have contributed to reducing illegal logging. While the
EU system established under the Regulation would be an efficient tool to lower the
compliance costs for EU operators, the main instrument for its operationalisation, i.e. the
VPAs, has not delivered. One of the main problems as regards the FLEGT Regulation is the
fact that the main EU trade partners have not shown interest to engage in VPA processes,
resulting in only 3 of timber imports to the EU covered by an operational VPA system. Over 15 years after the FLEGT Action Plan set the basis for these processes in 2003, only one
country of the 15 with which the EU has engaged in a VPA process, has an operating FLEGT
licensing system in place and only one country from the top 10 EU timber trading partners is
engaged in a VPA process. To respect bilateral commitments the European Union has entered into and to preserve the
progress achieved with partner countries that have an operating system in place FLEGT
licensing stage, this Regulation includes a provision declaring wood covered by a FLEGT
license to have fulfilled the legality requirement.
Some VPA components might be integrated
where feasible and agreed by the partners into specific cooperation programmes, like Forest
Partnerships or others to further support forest governance. Stakeholder consultations
The Open Public Consultation OPC carried out by the Commission in 2020 received nearly
1.2 million responses. A majority of stakeholders agreed on the need for an EU-level
intervention to reduce the EUs contribution to global deforestation and forest degradation. Most stakeholders also agreed on setting out an EU deforestation-free definition as a
requirement of the policy intervention. In terms of policy measures, the OPC showed strong support for legally binding options
deforestation-free requirement, mandatory due diligence, mandatory public certification, etc. while soft, voluntary measures like voluntary due diligence, voluntary labelling or voluntary
private certification were considered to lack in effectiveness. The overwhelming majority of
stakeholders businesses associations and NGOs supported a mandatory due diligence
regime, although the preferred details of this system vary from one respondent to another.
The
detailed conclusions from the stakeholder consultations, including the Feedback on the
inception impact assessment, the findings of the OPC and the outcome of targeted stakeholder
consultation, are included in Annex 2 of the Impact Assessment. In line with the announcement made in the 2019 Communication, the European Green Deal,
the 2030 EU Biodiversity Strategy and the Farm to Fork Strategy, this initiative focuses on
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forests. The European Parliament and NGOs advocated for an inclusion of other ecosystems. Based on the experience with existing legislation, such an expansion of the scope was
considered premature as the lack of practical experience would be detrimental to the
effectiveness and enforceability of the policy measures hereby assessed.
However the need
and feasibility to expand its scope to cover also other ecosystems will be evaluated as part of
an early review. Collection and use of expertise
To support the analysis of the different options, the Commission awarded a support contract
to external experts, to carry out two studies Impact assessment on demand side measures to
address deforestation, and Support study for a Fitness Check of the EUTR and FLEGT
Regulation. These studies provided part of the analysis and data underlying the policy
options presented in the Impact Assessment and, in turn, in the present Regulation. This
initiative also builds on the findings of a third study focusing on Certification and
Verification Schemes in the Forest Sector and for Wood-based Products which has been
carried out concomitantly to the Impact Assessment. The Commission also availed itself of inputs provided during the meetings of the Commission
Expert GroupMulti-Stakeholder Platform on Protecting and Restoring the Worlds Forests,
including the EUTR and the FLEGT Regulation. Since the launch of the roadmap for this
legislative initiative in February 2020, the group has met nine times in different
configurations and included four specific workshops to gather inputs on policy options
studied in the Impact Assessment. Alongside the above-mentioned support studies, Expert Group meetings, and stakeholder
consultations, the Commission also paid close attention to the European Parliament resolution
of 22 October 2020 with recommendations to the Commission on an EU legal framework to
halt and reverse EU-driven global deforestation 20202006 INL, as well as the positions
expressed by the Council of the EU, in particular the Council Conclusions on the 2019
Communication.11
Impact assessment
A total of 17 policy measures were considered in the initial viability screening carried out in
the preparatory Impact Assessment. This initial list of potential measures covered a wide
range of possible interventions, including both regulatory and non-regulatory instruments. The viability screening assessed each policy measure against a number of criteria such as the
legal, technical, political feasibility and proportionality, their potential effectiveness and
efficiency as well as feedback received from stakeholders, EU Member States and third
countries. On the basis of the viability screening, five policy options were retained and studied in further
detail 1 An improved mandatory due diligence procedure 2 a benchmarking system and a
list of contravening operators combined with a tiered improved mandatory due diligence
system 3 a mandatory public certification combined with an improved due diligence
requirement 4 mandatory labelling combined with an improved due diligence requirement
5 a deforestation-free requirement for placing on the EU market supported by benchmarking
and country card systems. 11
Conclusions of the Council and of the Governments of the Member States sitting in the Council on the
Communication on Stepping Up EU Action to Protect and Restore the Worlds Forests - Council conclusions
1515119 of 16 December 2019
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All policy options considered build on common elements 1 A deforestation-free definition,
based on the FAO definition, with which products need to comply and an additional
requirement for products to be legal according to the laws of the country of production 2 A
product scope, which is regularly reviewed and updated, focusing on commodities with the
highest EU embodied deforestation beef, palm oil, soy, wood, cocoa, and coffee and related
products 3 A prohibition to place commodities and products on the EU market that are
associated with deforestation and forest degradation and which have not been produced in
compliance with applicable and relevant legislation of the producer countries. Options 2 to 4
are combined with a mandatory due diligence requirement as proposed under option 1. The preferred option was number 2. It combines a due diligence requirement with a country
benchmarking system that will categorise countries taking into account deforestation and
forest degradation linked to the relevant commodities alongside criteria related to the
countries engagement in fighting deforestation and forest degradation. There will be three
categories of countries low, standard and high risk. The obligations for operators and
Member States authorities will vary according to the level of risk that the country of
production represents, with simplified due diligence duties for low risk and enhanced scrutiny
for high risk countries. It is expected that the preferred option would prevent deforestation driven by EU consumption
and production of the six commodities included in the scope, with projected benefits well
above 71,920 hectares of forest less affected by EU-driven deforestation and forest
degradation annually by 2030. This would also mean a reduction of at least 31.9 million
metric tons of carbon emissions to the atmosphere every year due to EU consumption and
production of the relevant commodities, which could be translated into economic savings of at
least 3.2 billion EUR annually. In addition, this option is expected to decisively contribute to
protecting biodiversity which is on its turn also strongly linked to preventing climate change. This option should also contribute to achieving the specific objectives of the EU intervention,
namely creating a level playing field for companies operating in the EU market minimising
the consumption of products coming from supply chains associated with deforestation or
forest degradation and increasing EU demand for and trade in legal and deforestation-free
commodities and products. Smallholders producing the relevant commodities may face
adaptation challenges.
All these factors are expected to be mitigated by the proposed cut-off
date of 2020, as most products currently in trade would be sourced from land put into
production prior to 2020. Regulatory fitness and simplification
This Regulation is expected to create a level playing field for companies operating in the EU
market. Producers implementing more sustainable production and transparent supply chains
are expected to gain share in the EU market and increase their competitiveness compared to
producers causing deforestation independent of their size. The main driver for costs of due
diligence obligations is the complexity of supply chains and the risks associated with the
sourcing country, not the companies size. While implementing due diligence procedures and, where required, shifting supply chains
may be more challenging for SMEs, the due diligence requirement combined with
benchmarking would allow SME operators and traders to benefit from lower costs of the
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The proposal includes an Information and communication system Article 29 that would
enable the electronic processing of information both among competent authorities and
between those and the economic operators.
This system will facilitate and streamline the
duties of operators and the enforcement by competent authorities. Fundamental rights
The proposed policy option will require products to have been produced in compliance with
the deforestation-free definition and with the laws of the country of production. This entails
that labour, environmental and human rights laws applicable in the country of production
both national and international will need to be taken into account when assessing the
compliance of products with this initiative. This includes the rights of indigenous peoples,
which is expected to contribute to protecting the rights of vulnerable local communities. At Unions level, the proposal respects the Charter of Fundamental rights of the EU and in
particular its Article 2 right to life, Article 8 protection of personal data, Article 16
freedom to conduct a business, Article 17 right to property and Article 37 environmental
protection. In accordance with Article 521 of the Charter, any limitation on the exercise of the rights
and freedom recognised by the Charter by this legislative proposal are provided by the law
and respects the essence of those rights and freedoms. Subject to the principle of
proportionality, limitation are made only if they are necessary and genuinely meet the
objectives of general interest recognised by the Union or the need to protect the rights of
freedoms of others. Ensuring a high level of environmental protection and the improvement of
the quality of the environment constitutes, in particular, an objective of general interest
recognised by the Charter which might justify limitations to other fundamental rights. 4. BUDGETARY IMPLICATIONS
The legislative financial statement attached to this proposal sets out the implications for
budgetary, human and administrative resources. A total budget of EUR 16,519,000 is foreseen for the setting up and implementation of the
Regulation during the first five years of operation provisionally foreseen from 2023 to 2027. This includes a budget of EUR 6,650,000 under Heading 7 of the Multiannual Financial
Framework MFF for human resources five additional staff in DG ENV implementing the
Regulation and international cooperation, two additional staff in DG INTPA for the related
cooperation and development and 1 staff in DG TAXUD for implementing customs
obligations and other administrative expenses. It also includes a budget of EUR 9,869,000
under Heading 3 of the MFF. The latter is linked to support various implementation tasks
related to the legislative provisions that will be carried out by Commission services from 2022
to 2027, including procurement and potential administrative arrangements.
5. OTHER ELEMENTS
Implementation plans and monitoring, evaluation and reporting arrangements
Member States authorities notably competent authorities as described in Chapter 3 are
responsible for the enforcement of the present Regulation. For that purpose they shall draw up
inspection plans based on a risk-based approach, taking into account the risk level assigned
through the country benchmarking system. The reporting framework established in Article 20
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builds on the experience of the EUTR and aims at strengthening the review of Member States
monitoring activity, the content and the quality of checks as well as their follow up. The system should be reviewed after three years of full operation to identify any issues and
potential improvements, and every five years thereafter. Article 32 specifically envisages that
the first review should include an assessment of the need and feasibility of extending the
scope of the Regulation to other ecosystems.
In addition, at the latest two years after the entry
into force the Commission will carry out a first review of Annex I, following indications
provided by scientific evidence. Detailed explanation of the specific provisions of the proposal
Article 1 Subject matter and scope
Article 11 lays out the scope of application rationae materiae of the Regulation by defining
relevant commodities i.e. cattle, cocoa, coffee, oil palm, soya and wood and relevant
products, i.e. those listed in Annex I, that contain, have been fed with or have been made
using relevant commodities, to which this Regulation will apply. It also clarifies that the
Regulation will apply equally to the placing and making available on the Union market, as
well as to the export from the Union. Paragraph 2 clarifies the application rationae temporis of this Regulation, establishing that it
will not be applicable to relevant commodities and products placed on the Union market or
exported therefrom that were produced before the date of the entry into force, as foreseen in
Article 36. Article 2 Definitions
Article 2 establishes the definitions used throughout the rest of the operative part of the
Regulation. These include definitions paragraphs 1 to 8 required to make operational the
core objective of the instrument, e.g. deforestation, forest, plantations, deforestation-free and
produced. The definitions rely to the extent possible in concepts developed at international
level, in particular within Food and Agriculture Organization of the United Nations FAO. The establishment of a deforestation-free definition is one of the major innovations of the
proposed Regulation in relation to the EU Timber Regulation. The results of the Impact
Assessment show that setting a common requirement for products and commodities,
regardless of their country of production, is expected to increase the effectiveness of the
policy intervention by preventing loopholes associated with legal deforestation and by
facilitating implementation via remote monitoring. In addition, the deforestation-free
definition is expected to prevent the creation of wrong incentives for partner countries, who
might otherwise be tempted to lower environmental standards to facilitate the access of their
products to the EU if only legality controls were established in the proposal. The definition of deforestation-free sets a cut-off date of 31 December 2020. This means that
no commodities and products in the scope of the regulation would be allowed to enter or exit
the EU market if they were produced on land subject to deforestation or forest degradation
after that date. The proposed date minimises disruption of supply chains and potential
negative impacts in partner countries.
It corresponds to international commitments to halt
deforestation as for example included in the Sustainable Development Goals Goal 15.2. The rest of the definitions paragraphs 9 to 30 refer to the duty holders and the activities
regulated, such as operator, trader, placing on the market, making available on the market, etc. To the extent possible, they are based on concepts already existing in EU law in relevant
internal market and customs legislation, and also addresses specific issues emerged in the
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implementation of the EUTR.
The definitions have slightly been changed with regard to the
Impact Assessment with the aim of increasing their legal precision and of accommodating the
new developments in related EU legislation. Article 3 Prohibition
Article 3 serves as a cornerstone of the Regulation by clearly outlining the prohibition of
placing or making available on the Union market, or exporting from the Union market, the
relevant commodities and products in scope that are not compliant with this Regulation,
accompanied by the clarification that a due diligence statement is always necessary when
carrying out such commercial activities. The reference to deforestation a and legality b is
necessary to allow addressing comprehensively the main objectives of this Regulation. The prohibition in c complements the others by creating a general obligation to submit due
diligence statements when placing relevant commodities and products on the market. This
prohibition ensures that operators become aware of their duties to exercise due diligence and
are discouraged from omitting due diligence procedures. Based on the experience of the
EUTR, this requirement will facilitate enforcement and where necessary legal action to
remedy or sanction such infringements. Article 4 obligations of operators
Article 4 defines the obligations for operators under the Regulation. It describes the due
diligence procedure and thus serves as the general rule on obligations of operators. Paragraph 1 places on operators the obligation to perform due diligence for all relevant
commodities and products to ensure their compliance with the prohibition of Article 3a and
b and to submit a due diligence statement prior to placing them on the Union market or
exporting therefrom. The necessary information required by the due diligence statement is
spelled out in Annex II. Paragraph 2 outlines the specific procedure that governs the submission of due diligence
statements. After reaching the conclusion that the relevant commodity or product is compliant
with the Regulation, the operator must submit a due diligence statement to the information
system see Article 31 before the commodity or product is placed on the market. For relevant
commodities and products which are placed under release for free circulation or export,
reference must be made in the customs declaration to the due diligence statement, which will
allow the necessary close cooperation between customs authorities and competent authorities. According to paragraph 3, operators assume responsibility for the compliance of products by
drawing up a due diligence statement. Paragraph 4 explicitly requires operators to refrain
from placing on the market or to export without prior submission of a due diligence statement. Paragraph 5 establishes the same obligation where 1 relevant products or commodities do
not fulfil the deforestation-free or legality requirements, or 2 where the due diligence
has come to the conclusion that the risk of being non-compliant is not negligible or 3 where
due diligence procedure has not been completed.
Paragraph 6 obliges operators to take action
and inform the competent authorities if new information becomes available after the due
diligence procedure has been concluded and the statement submitted. Article 6 Obligations of traders
For the purpose of this Regulation, like in the EUTR a trader can be defined as any natural or
legal person who, in the course of a commercial activity, makes available on the Union
market relevant commodities and products Article 2j. In general, traders are subjected to
lighter obligations than operators since by the time a trader can dispose of relevant
commodities or products, these have already been placed on the market. However, traders,
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especially large traders have a significant influence on supply chains and play an important
role in ensuring that relevant commodities and products are deforestation-free. That is why this Article differentiates between obligation applicable to large traders that are
not small and medium-sized enterprises SMEs and obligations applicable to traders which
are SMEs. According to paragraphs 2 and 3, traders which are SMEs are required to collect a
record of their suppliers and customers, keep that information for at least five years and make
such information available to competent authorities upon request. This requirement is
estimated to involve only negligible costs, as such information can be expected to be part of
normal business operation. Traders which are SMEs are also expected to take action and
inform the competent authorities if new information becomes available regarding the non-
compliance of their commodities and products paragraph 4
Conversely, large traders that are not SMEs are subject to the same obligations as operators
paragraph 5. Therefore, large traders have to submit a due diligence statement according to
Article 4, thereby becoming liable for compliance of the relevant commodity or product with
this Regulation. Moreover, they are subject to the same due diligence procedure than
operators in addition to the gathering of information, they have carry out risk assessment
according to Article and, where necessary, risk mitigation according to Article 10. Traders
that are SME are dispensed from these obligations. Likewise, large traders are subject to the
same checks on operators as foreseen in Article 15, whereas traders that are SME are subject
to checks referred to in Article 16. Article 8 Due diligence
Article 8 outlines the due diligence procedure that constitutes the obligation of operators
according to Article 41 and traders that are not SMEs according to Article 65. Any due
diligence procedure should ensure that the risk of non-compliant relevant commodities or
products being placed or exported from the EU market is negligible. To do so, operators and
non SMEs traders shall gather all relevant information as indicated in Article 9 step one of
due diligence process. On the basis of that information they shall identify and assess the risk
of possible non-compliance of relevant commodities and products with the requirements of
this Regulation Article 101 to 4 and 106 step two of due diligence process. Where
necessary, they shall adequately mitigate such risks to a negligible level Article 105 step
three of the due diligence process. Due diligence needs to be carried out prior to any placing of relevant commodities and
products on the EU market or prior to exporting from the EU market. If the conclusion of the
risk assessment is that the risk of non-compliant commodities or products entering the EU
market is non-negligible, the operator needs to take risk mitigation measures that are adequate
to lower the risk to a negligible level. If there is no access to the applicable legislation or other
relevant information, the risk cannot be fully assessed and thus not mitigated to a negligible
level.
If the risk cannot be mitigated to a negligible level, the operator shall not place the
relevant commodities or products on the EU market Article 101. Article 9 Information requirement
A major innovation compared to the EUTR, is the geographic information obligation
contained in Article 9, which requires operators to collect the geographic coordinates or geo-
location via latitude and longitude of all the plots of land where the relevant commodities
and products were produced. As deforestation is linked to land-use change, monitoring
deforestation requires a precise link between the commodity or product placed on or exported
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Requiring the plot of land or farm where the commodity has been produced allows for the use
of satellite images and positioning widely available and free-to-use digital tools to check
whether a product or commodity is compliant or not.
Geographic information on the plot of
land and satellite monitoring is a field-tested combination that has proven in the past to be
able to curb deforestation in a given area and is expected to boost the effectiveness of the
policy intervention, while also making fraud in supply chains more complicated and easily
detected. The Union has developed its own satellite Positioning, Navigation and Timing
PNT technology EGNOSGalileo and its own Earth observation and monitoring system
Copernicus. Both EGNOSGalileo and Copernicus offer advanced services, which provide
important economic benefits to public and private users. Therefore, satellite images and
positioning stemming from the use of EGNOSGalileo and Copernicus can be part of the
information used for compliance checks. Geographic information linking products to the plot of land is already used by industry and
certification organizations, as well as on relevant EU legislation.
Directive EU 20182001
requires information on the sourcing area for problematic countries. A series of EU rules
ensures the traceability of beef from birth to death, including via means such as ear tags,
bovine passports and a computerised database. Article 10 Risk assessment and mitigation
Article 10 outlines the steps to be undertaken to assess and mitigate the risk that relevant
commodities and products associated with the deforestation and forest degradation are placed
on the market. As such, this Article describes in detail the criteria and the modalities to carry
out risk assessment and risk mitigation respectively step 2 and step 3 of due diligence
procedure as introduced in Article 8. Paragraph 1 of Article 10 clarifies the purpose of risk
assessment, that is to identify possible non-compliance of relevant commodities and products
with this Regulation, and establishes the central obligation for operators not to place the
relevant commodity or product on the market unless they cannot demonstrate that the risk of
non-compliance is negligible. The notion of negligible risk is defined in Article 218 as when
a full assessment of both the product-specific and the general information on compliance with
Articles 3a and 3b by relevant commodities or products shows no cause for concern. While building on risk assessment criteria established in the EUTR, paragraph 2 further
qualifies them and provides additional indications to the operators about the elements to be
taken into account, reflecting the fact that this Regulation focuses on both legality and
sustainability i.e. deforestation-free. Beyond the risk level set by the country benchmarking
system, the list includes information on the countryarea of production, features of the
relevant commodity and product and of the supply chain, as well as other relevant
complementary information such as certification or other third-party verification tools,
provided that they meet the information requirements set out in Article 9. Article 12 Simplified due diligence
Article 12 describes the obligations stemming from sourcing relevant commodities and
products from a country or parts thereof that has been assessed as low risk according to the
country benchmarking outlined in Chapter 4. When the country of production or parts thereof
is low-risk under the benchmarking, operators are still under the obligation foreseen in Article
9 step 1 of due diligence procedure, i.e. to collect information, documents and data
demonstrating that the relevant commodities and products are compliant with Article 3 of this
Regulation. However they are dispensed from carrying out the second and third step of the
due diligence process, i.e.
the risk assessment and risk mitigation as described in Article 10. Therefore, in this case operators are in principle not required to demonstrate that the risk of
non-compliance is negligible. EN
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However, should the operator be made aware, for example through the collection of
information, of any information regarding specific risk of non-compliance, all obligations of
Article 8, and therefore all the three steps of due diligence procedure, have to be fulfilled
Article 122. Article 14 obligations to perform checks
Article 14 lays down the general obligations of competent authorities under the Regulation. Its paragraphs 1 and 2 establish the central obligation of competent authorities to carry out
checks on operators and traders to assess their compliance with due diligence requirements,
and also to establish whether the relevant commodities and products placed or made available
on the Union market or exported from it are compliant with the Regulation. Paragraph 3 refers
to the risk-based plan, a key tool that should guide the checks conducted by the competent
authority. The plans for checks should include risk criteria to carry out risk analysis of the due
diligence statements. The plans should be regularly reviewed in light of the results of its
implementation. Those operators and traders showing a consistent track-record of compliance
should be subject to a reduced frequency of checks. Paragraph 4 requires competent authorities to carry out the risk analysis of due diligence
statements by electronic data processing techniques integrated in the information system set
up in Article 31. Paragraph 5 sets out that the risk analysis should allow the competent authorities to identify
the operators or traders, or relevant commodities and products, to be checked. Paragraph 6 requires competent authorities to take immediate action in case the risk analysis
reveals that certain commodities and products present high risk of non-compliance. Such
action may entail interim measures to suspend the placing or making available on the market
of the commodities and products. In case of goods entering or leaving the Union market, and
once the electronic interface set out in Article 261 is in place, the competent authorities can
request customs authorities to suspend the release for free circulation or the export of the high
risk goods. The temporary suspensions of high-risk commodities and products should allow competent
authorities to perform the necessary checks on the compliance of the commodities and
products. Paragraph 7 establishes an initial period of suspension of 3 working days, which can
be extended if competent authorities require additional time. Paragraph 8 requires the competent authorities to exchange information and coordinate the
development of the risk criteria included in the plans for checks. This should foster a uniform
application of the Regulation and improve its effectiveness. Paragraph 9 establishes an important obligation for Member States to ensure effective checks
through their competent authorities. The two parameters in use guarantee that a certain
number of operators and traders is checked, whilst also requiring a certain percentage of the
market value in each category of commodities and products. One dimensional approaches
such as checking few operators and traders with a vast market share or checking larger
numbers of small operators and traders with a negligible market share would not give this
Regulation the necessary effectiveness and are therefore ruled out in paragraph 5. The
percentages of coverage are necessary to enable a comprehensive control of the market that
dissuades potential infringements. Paragraph 10 refers to the country benchmarking system and establishes the necessity of
enhanced scrutiny Article 20 carried out by the competent authorities with regard to
commodities and products produced in high-risk countries or parts thereof. It thus connects
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the duties of the competent authorities with the three-tier system of benchmarking as
described in Article 27. Notwithstanding the importance of checks conducted in accordance with their risk-based plan,
paragraph 11 clarifies that competent authorities shall also carry out checks outside the scope
of such plans, when they come in possession of evidence or other relevant information,
concerning potential non-compliance with this Regulation. Article 15 Checks on operators
This Article lays down the obligation of competent authorities with regard to checks to be
carried out on operators. It builds on Article 103 of the EUTR, though it provides additional
clarity and guidance on specific criteria for checks to be conducted by Competent Authority
to better analyse relevant documentation of due diligence system in use, and to better assess
the risk of non-compliance. Clear standards for compliance checks for competent authorities
are an essential element to ensure an effective and uniform application of this Regulation
across the Union. Paragraph 2 distinguishes between mandatory and facultative measures. The mandatory
measures referred to in letters a to d include checks on due diligence documentation and
procedures that do not require technical analyses of products or other on-site activities by
competent authorities.
Facultative measures in letters e to h include on-site inspection and
technical and scientific checks adequate to determine the exact place where the relevant
commodity or product was produced and whether it was deforestation free. Article 19 Reporting
Article 19 outlines Member States reporting obligations regarding the implementation of the
proposed Regulation. This Article builds on Article 20 of the EUTR Reporting, as
subsequently amended by Regulation 20191010, which aligned reporting obligations in
environmental legislation12. Therefore, Article 19 confirms that Member States shall report on
the application of this Regulation on an annual basis paragraph 1 and that the Commission
services will make publicly available, on an annual basis, a Union-wide overview on the basis
of the data submitted by the Member States paragraph 3. Paragraph 2 further qualifies the information Member States are to provide so to strengthen
reporting obligations and to enable the Commission to analyse more accurately the quality of
Member States monitoring activity.
This in line with the findings the European Court of
Auditors Special Report 212021 which highlighted the shortcomings of the reporting system
under the EUTR13, and will allow the Commission to address effectively the Courts
recommendation to strengthen its review of Member State checks14. Article 20 Enhanced scrutiny
12
Regulation EU 20191010 of the European Parliament and of the Council of 5 June 2019 on the alignment of
reporting obligations in the field of legislation related to the environment, and amending Regulations EC No 1662006
and EU No 9952010 of the European Parliament and of the Council, Directives 200249EC, 200435EC, 20072EC,
2009147EC and 201063EU of the European Parliament and of the Council, Council Regulations EC No 33897 and EC
No 21732005, and Council Directive 86278EEC OJ L170126 of 25.6.2019. 13
ECA Special Report 212021 EU funding for biodiversity and climate change in EU forests positive but limited
results. See notably paragraph 36, where the Court Reporting under the Timber Regulation does not provide the
information with which the Commission can analyse the quality of Member States monitoring activity, the national rules
defining illegal logging or the procedures used for checks. Nor does it require Member States to substantiate their replies
with supporting documents that would allow it to verify the accuracy or completeness of the information. 14
the aim of strengthening its review of Member State checks on the Timber Regulation. See Recommendations 2.a The Commission should a assess the potential for making legislative proposals with
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When relevant commodities and products are sourced from a country or parts thereof that has
been assessed as high risk according to the country benchmarking system outlined in Chapter
5 they are subject to enhanced scrutiny by the relevant competent authorities. Unlike Article
12, Article 20 does not qualify a different set of due diligence obligations for operators or
traders. Competent authorities shall ensure that the checks they carry out on an annual basis cover at
least 15 of the operators, as well as 15 of the quantity of relevant commodities and
products produced in high-risk countries or parts thereof. It should be highlighted that according to Article 27 at the entry into force of the Regulation,
all countries will be assigned a standard level of risk. Therefore, the above obligations will
arise for competent authorities as soon as a high-risk country or parts thereof will feature in
the list to be published by the Commission according to Article 271, and as long as relevant
commodities and products produced in a high risk country or parts thereof are placed or made
available in their market. Article 22 Market surveillance measures
Article 22 sets the obligation for competent authorities to act without delay once they have
established that a relevant commodity or product is not compliant with this Regulation. In this
case competent authorities shall require that the relevant operator or trader takes appropriate
and proportionate corrective action to bring the non-compliance to an end. Paragraph 2 outlines the possible corrective measures the operator or trader can be required to
undertake.
This provision draws specifically from Article 16 of the Market Surveillance
Regulation15 according to Article 3 of this Regulation recall means any measure aimed at
achieving the return of a product that has already been made available to the end user
whereas withdrawal means any measure aimed at preventing a product in the supply chain
from being made available on the market. Article 23 Penalties
Article 23 establishes the obligation of Member States to lay down rules on penalties
applicable to infringements of this Regulation. The existence and the application of effective
proportionate and dissuasive penalties in the national systems is a critical element to element
the effective and uniform implementation of this Regulation across the Union. Therefore, paragraph 2 provides the list of penalties to be established in national legal systems
This list include fines, the confiscation of the relevant commodities and products as well as
the confiscation of revenues, the suspension or prohibition of relevant economic activities and
the exclusion from public procurement processes for the operators and traders that violate the
Regulation. Member States legislation must provide for a variable amount of fines in
dependence on the annual turnover of the operator or trader that violated the Regulation. This
is especially relevant as a disincentive for large operators and traders that are not SMEs to
violate the Regulation.
It thus serves the purpose of establishing effective, proportionate and
dissuasive penalties. Article 24 Controls
Article 24 provides the rules for controls on relevant commodities and products placed under
the customs procedure release for free circulation or export. 15
Regulation EU 20191020 of the European Parliament and of the Council of 20 June 2019 on market surveillance
and compliance of products and amending Directive 200442EC and Regulations EC No 7652008 and EU No 3052011
OJ l 1691 of 25.6.2019. EN
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Paragraph 2 establishes that the competent authorities are responsible for verifying
compliance with this Regulation, including for commodities or products entering or leaving
the Union. It also clarifies the interaction with the provisions of Regulation EU 9522013
and Regulation EU 20191020. Paragraph 3 identifies customs core role consisting in
controlling the correct declaration of relevant commodities and products entering or leaving
the Union market. The due diligence statement in relation to a relevant commodity or product entering or leaving
the Union shall be registered in the Information System referred to in Article 31. According to
paragraph 4, the said Information system will then assign a reference number to the due
diligence statement, which shall be made available to customs when lodging the customs
declaration for release for free circulation or export of that relevant commodity or product,
except where the due diligence statement is lodged pursuant to Article 262. Paragraph 5 requires that when a customs declaration for release for free circulation or export
of a relevant commodity or product entering or leaving the Union market is lodged, customs
authorities shall verify the status of the due diligence statement related to that relevant
commodity or product using the electronic interface referred to in Article 261. Paragraph 6 sets out that where the risk analysis carried out by competent authorities
according to Article 144 establishes that a relevant commodity or product presents a high
risk of non-compliance with the requirements of this Regulation, the status of the due
diligence statement related to that relevant commodity or product is modified accordingly in
the Information System. In such circumstances, customs authorities should suspend the
release for free circulation or export of that relevant commodity or product. Paragraph 7 indicates the conditions under which customs authorities should allow a relevant
commodity or product to be released for free circulation or exported. Paragraph 8 establishes the course of action in case the competent authorities conclude that a
relevant commodity or product entering or leaving the Union market is not compliant with
this Regulation. In that case competent authorities should change the status of the
corresponding due diligence statement accordingly in the Information System and may also
indicate in the Information System that they object to placing the relevant commodity or
product under other customs procedures. Upon notification of that status, customs authorities should not allow the release for free
circulation or export of that relevant commodity or product and should include a notice in the
customs data-processing system and, where possible, on any document accompanying the
relevant commodity or product. Where the relevant commodity or product is subsequently declared for other customs
procedures and provided that the competent authorities did not object to such placement, the
notice shall be included in the customs declarations by the operators and registered, under the
same conditions, in the customs data-processing system and, where possible, on the
accompanying documents used in connection with any such procedures. According to paragraph 10, customs authorities may destroy or otherwise render inoperable a
non-compliant relevant commodity or product upon the request of the competent authorities
or where they deem it necessary and proportionate. The cost of such measure shall be borne
by the holder of the relevant commodity or product. Article 25 Exchange of information and cooperation among authorities
This Article sets out an obligation for competent authorities, customs authorities and the
Commission to cooperate in implementing the Regulation paragraph 1. EN
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Paragraphs 2 and 3 establish a link to the cooperation and exchange of information
mechanisms under Regulation EU No 9522013. Article 26 Electronic interfaces
Paragraph 1 requires the Commission to set up an electronic interface to connect the EU
Single Window Environment to the information system established under Article 31. Paragraph 2 establishes the basic functionality of such interface and paragraph 3 empowers
the Commission to adopt implementing acts to define the detailed data and functioning of the
interface. Article 27 Assessment of countries
Article 27 introduces the country benchmarking system, which is a key feature of this
Regulation. The objective of the benchmarking is to incentivise countries to ensure stronger
forests protection and governance, to facilitate trade and to better calibrate enforcement
efforts by helping competent authorities to focus resources where they are most needed, and
to reduce companies compliance costs. Through the benchmarking system, the Commission will assess the risk that countries or parts
thereof produce relevant commodities and products that are not deforestation-free. The
benchmarking system will assign each country or parts thereof one of three possible levels of
risk low, standard and high risk.
At the entry into force of the Regulation, all countries will
be assigned a standard level of risk. The assessment will be based on the criteria outlined in
paragraph 2. Paragraph 3 outlines the procedure to be followed by the Commission prior to changing the
existing risk category for a country or parts thereof. This will include the invitation to the
country to respond within adequate time and to provide information deemed useful, including
on measures taken by the country to remedy the situation. The Commission would make the country risk categorisation publicly available by the
adoption of Commission implementing acts and will update the list where necessary, when
the emergence of new scientific evidence requires it. The obligations for operators and
Member States competent authorities are differentiated according to the level of risk of the
country of production or parts thereof, with simplified due diligence duties for operators
sourcing from low risk countries or parts thereof Article 12 and enhanced scrutiny for
competent authorities operating checks on relevant commodities and products produced in
high risk countries or parts thereof Article 20. Article 29 Natural or legal persons substantiated concerns
According to Article 15 and 16, a competent authority may carry out checks on operators and
traders when it is in possession of relevant information, including on the basis of substantiated
concerns provided by third parties. As per Article 221 substantiated concern means well-
founded claim based on objective and verifiable information regarding non-compliance with
the present Regulation and which may require the intervention of competent authorities. The substantiated concerns may refer to specific shipments, suppliers, operators, traders or
any situation in specific countries of production that generate risks of relevant commodity or
product being placed on the market and which, as a result, may require the intervention of
competent authorities. Substantiated concerns were also part of the system established in the
EUTR Article 102. Article 29 builds on that experiences and clarifies the obligations of
Competent Authority to assess the substantiated concerns and take the necessary operational
steps that may be required to detect breaches and to prevent the further placing and circulation
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Substantiated concerns are also relevant to operators and traders. Article 46 of this
Regulation states the obligation for an operator who has been made aware, through a
substantiated concern, of the non-compliance of the relevant commodity or product, to inform
immediately the relevant competent authority of the country where the product has been
placed on the market or exported from. The same obligation applies to traders, regardless of
their size Article 6 4 and 5. Article 102i also requires that the existence of a
substantiated concern should be taken in to account as a risk assessment criteria. Article 31 Register Information system
Article 31 requires the Commission to establish an information system, through which due
diligence statements foreseen under Article 42 need to be made available to competent
authorities. Paragraph 2 lays down the minimum required functions of the system, including inter alia its
connection with customs via the EU Single Window Environment for Customs. Paragraph 3
confers upon the Commission the task to establish the rules on the functioning of the system
via implementing act. Paragraphs 4 and 5 concern access to the information system. As a central data base for the
implementation of the Regulation, operators and traders as well as competent authorities shall
have access, the details of which will depend on their obligations.
A wider public shall also
have access to the data, in an anonymised way. Article 32 Review
Article 32 establishes the rules governing the revision of the Regulation. Paragraph 1 provides
for a first review process taking place no later than two years after the entry into force that
results in a report and potential legislative proposals to amend the Regulation. This first
review will focus on the need for and feasibility of expanding the scope of the Regulation to
other ecosystems beyond forests and further commodities. The general review foreseen in paragraph 2 will take place five years after the date foreseen in
Article 322, i.e. 12 months from the entry into force. This provision also anticipates the
content of this first general review, which will include an assessment of the opportunity to
introduce further trade facilitation tools and the impact of the first years of application of this
Regulation on farmers. Finally, paragraph 3 focuses on the review of relevant products listed in Annex 1. This review
will take place two years from the entry into force of the Regulation and thereafter, at regular
interval thereby allowing a progressive product scope.
The amendment of the list of products
included in Annex 1 will be carried out through delegated act paragraph 4. Article 36 Entry into force and date of application
This Regulation shall apply from the date of the entry into force. However, paragraph 2
establishes that Articles 3 to 12, 14 to 22, 24, 29 and 30 shall apply 12 months from the entry
into force of this Regulation. Paragraph 3 however stipulates that these Articles shall apply 24
months from the entry into force of this Regulation for operators that are microenterprises
established by December 31, 2020, except for products covered by the Annex to EU
Regulation 9952010 EUTR. These delays in application create a transition period in which the obligations of operators and
traders, as well as the obligations of competent authorities to conduct checks do not apply.
Such a transition period, which is longer for microenterprises, will give operators and traders
adequate time to adapt to their obligations under the Regulation. EN
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20210366 COD
Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
on the making available on the Union market as well as export from the Union of certain
commodities and products associated with deforestation and forest degradation and
repealing Regulation EU No 9952010
Text with EEA relevance
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular
Article 192 thereof,
Having regard to the proposal from the European Commission,
After transmission of the draft legislative act to the national parliaments,
Having regard to the opinion of the European Economic and Social Committee1,
Having regard to the opinion of the Committee of the Regions2,
Acting in accordance with the ordinary legislative procedure,
Whereas
1
Forests provide a broad variety of environmental, economic and social benefits,
including timber and non-wood forest products and environmental services essential
for humankind, as they harbour most of the Earths terrestrial biodiversity. They
maintain ecosystem functions, help protect the climate system, provide clean air and
play a vital role for the purification of waters and soils as well as for water retention. In addition, forests provide subsistence and income to about one third of the worlds
population and their destruction has serious consequences for the livelihoods of the
most vulnerable people, including indigenous peoples and local communities who
heavily depend on forest ecosystems.3 Furthermore, deforestation and forest
degradation reduce essential carbon sinks and increase the likelihood of new diseases
spreading from animals to humans. 2
Deforestation and forest degradation are taking place at an alarming rate. The Food
and Agriculture Organization of the United Nations estimates that 420 million hectares
of forest about 10 of the worlds remaining forests and an area larger than the
European Union have been lost worldwide between 1990 and 20204. Deforestation
and forest degradation are, in turn, important drivers of global warming and
OJ C , , p. . OJ C , , p. . Commission Communication of 27 July 2019 Stepping up EU Action to Protect and Restore the
1
2
3
Worlds Forests, COM2019 352 final. 4
Global
FAO,
httpswww.fao.orgdocumentscardencca9825en.
Resource
Forest
Assessment
2020,
p. XII,
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3
4
5
6
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8
biodiversity loss the two most important environmental challenges of our time. Yet
every year the world continues to lose 10 million hectares of forest. Deforestation and forest degradation contribute to the global climate crisis in multiple
ways. Most importantly, they increase greenhouse gas emissions through associated
forest fires, permanently removing carbon sink capacities, decreasing climate change
resilience of the affected area and substantially reducing its biodiversity. Deforestation
alone accounts for 11 of greenhouse gas emissions5. Climate breakdown induces the loss of biodiversity globally and biodiversity loss
aggravates climate change, they are inextricably linked, as recent studies have
confirmed. Biodiversity helps mitigate climate change. Insects, birds and mammals act
as pollinators, seed dispersers and can help store carbon more efficiently, directly or
indirectly. Forests also ensure a continuous replenishment of water resources and
prevention of droughts and their deleterious effects to local communities, including
indigenous peoples. Drastically reducing deforestation and forest degradation and
systemically restoring forests and other ecosystems is the single largest nature-based
opportunity for climate mitigation. Biodiversity is essential for the resilience of ecosystems and their services both on
local and global level. Over half of the global gross domestic product depends on
nature and the services it provides. Three major economic sectors construction,
agriculture, food and drink all highly depend on nature. Biodiversity loss threatens
sustainable water cycles and our food systems, putting our food security and nutrition
at risk. More than 75 of global food crop types rely on animal pollination. Further,
several industrial sectors rely on genetic diversity and ecosystem services as critical
inputs for production, notably for medicines. Climate change, biodiversity loss and deforestation are concerns of the highest global
importance, affecting the survival of humanity and sustained living conditions on
Earth. The acceleration of climate change, biodiversity loss and environmental
degradation, paired with tangible examples of their devastating effects on nature,
human living conditions and local economies, have led to the recognition of the green
transition as the defining objective of our time and a matter of intergenerational equity. Union consumption is a considerable driver of deforestation and forest degradation on
a global scale. The initiatives Impact Assessment estimated that without an
appropriate regulatory intervention EU consumption and production of the six
commodities included in the scope wood, cattle, soy, palm oil, cocoa and coffee will
rise to approximately 248,000 hectares of deforestation annually by 2030. As regards the situation of forests within the EU, the State of Europes Forests 2020
report6 states that, between 1990 and 2020, the area of forests in Europe has increased
by 9, carbon stored in the biomass has grown by 50 and wood supply has risen by
40.
However, less than 5 of European forest areas are considered undisturbed, or
natural, according to the European Environment Agencys State of the Environment
2020 report7. 5
IPCC, Climate Change and Land an IPCC special report on climate change, desertification, land
degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems,
httpswww.ipcc.chsrccl. 6
Forests 2020, httpsforesteurope.orgstate-europes-forests-2020. 7
httpswww.eea.europa.eusoerpublicationssoer-2020. Forest Europe - Ministerial Conference on the Protection of Forests in Europe, State of Europes
Environment
Environment
European
Agency,
State
2020,
the
of
EN
22
EN
9
initiatives
to address
specific actions on deforestation. the Commission adopted several
including
the global
In 2019,
its
In
environmental crises,
Communication Stepping up EU Action to Protect and Restore the Worlds Forests8,
the Commission identified as a priority the reduction of the Union consumption
footprint on land and encourage the consumption of products from deforestation-free
supply chains in the Union. In its Communication of 11 December 2019 entitled The
European Green Deal9, the Commission set out a new growth strategy that aims to
transform the Union into a fair and prosperous society, with a modern, resource-
efficient and competitive economy, where there are no net emissions of greenhouse
gases in 2050, where economic growth is decoupled from resource use and no person
or place are left behind. It aims to protect, conserve and enhance the Unions natural
capital, and protect the health and well-being of citizens and future generations from
environment-related risks and impacts. Furthermore, the European Green Deal aims to
provide citizens and future generations with, among others, fresh air, clean water,
healthy soil and biodiversity. To that end, the EU Biodiversity Strategy for 203010, the
Farm to Fork Strategy11, the EU Forest Strategy12, the EU Zero pollution action plan13
and other relevant strategies14 developed under the European Green Deal, further
highlight the importance of action on forest protection and resilience. In particular, the
EU Biodiversity Strategy aims to protect nature and reverse the degradation of
ecosystems. Finally, the EU Bioeconomy Strategy15 enhances the protection of the
environment and ecosystems while addressing the growing demand for food, feed,
energy, materials and products by seeking new ways to produce and consume. 10 Member States have repeatedly expressed their concern about persistent deforestation. They emphasised that since current policies and action at global level on conservation,
restoration and sustainable management of forests do not suffice to halt deforestation
and forest degradation, enhanced Union action is needed in order to contribute more
effectively to the achievement of the Sustainable Development Goals SDGs, under
the 2030 Agenda for Sustainable Development, which was adopted by all United
8
COM2019 352 final. 9
Communication from the Commission to the European Parliament, The European Council, The
Council, The European Economic and Social Committee and the Committee of the Regions, The European
Green Deal, COM2019 640 final. 10
Communication from the Commission to the European Parliament, The European Council, The
Council, The European Economic and Social Committee and the Committee of the Regions, EU Biodiversity
Strategy for 2030 Bringing nature back into our lives, COM2020380 final. 11
Communication from the Commission to the European Parliament, the Council, the European Council,
The European Economic and Social Committee and the Committee of the Regions, A Farm to Fork Strategy for
a fair, healthy and environmentally-friendly food system, COM2020381 final. 12
Communication from the Commission to the European Parliament, the Council, The European
Economic and Social Committee and the Committee of the Regions, A new EU Forest Strategy for forests and
the forest-based sector, COM2013 659 final. 13
Communication from the Commission to the European Parliament, the Council, the European
Economic and Social Committee and the Committee of the Regions, Pathway to a Healthy Planet for
All EU Action Plan
Towards Zero Pollution for Air, Water and Soil, COM2021400 final. 14
e.g. Communication from the Commission to the European Parliament, the Council, the European
Council, The European Economic and Social Committee and the Committee of the Regions, A long-
term Vision for the EUs Rural Areas - Towards stronger, connected, resilient and prosperous rural
areas by 2040, COM 2021 345 final. 15
Communication from the Commission to the European Parliament, the Council, The European
Economic and Social Committee and the Committee of the Regions, A sustainable bioeconomy for Europe,
Strengthening the connection between economy, society and the environment updated bioeconomy strategy,
Updated Bioeconomy Strategy, COM2018 273 final.
EN
23
EN
Nations Member States in 2015. The Council specifically supported the Commission
announcement in the Communication Stepping up EU Action to Protect and Restore
the Worlds Forests that it would assess additional regulatory and non-regulatory
measures and that it would present respective proposals.16
11 The European Parliament highlighted that ongoing destruction of the worlds forests is
linked, to a large extent, to the expansion of agricultural production in particular by
converting forests to agricultural land dedicated to producing a number of high-
demand products and commodities. The Parliament adopted on 22 October 2020 a
resolution17 in accordance with Article 225 of the Treaty on the Functioning of the
European Union TFEU requesting the Commission to submit, on the basis of Article
1921 TFEU, a proposal for an EU legal framework to halt and reverse EU-driven
global deforestation. 12 Combatting deforestation and forest degradation constitutes an important part of the
package of measures needed to reduce greenhouse gas emissions and to comply with
the Unions commitment under the European Green Deal as well as with the 2015
Paris Agreement on Climate Change18, and with the legally binding commitment
under the EU Climate Law to reach climate neutrality by 2050 and reduce greenhouse
gas emissions by at least 55 below 1990 levels by 2030.
13 Agricultural expansion drives almost 90 of global deforestation, with more than half
of forest loss due to conversion of forest into cropland, whereas livestock grazing is
responsible for almost 40 percent of forest loss19. 14 The Union imported and consumed one third of the globally traded agricultural
products associated with deforestation between 1990 and 2008. Over that period,
Union consumption was responsible for 10 of worldwide deforestation associated
with the production of goods or services. Even if the relative share of EU consumption
is decreasing, EU consumption is a disproportionally large driver of deforestation. The
Union should therefore take action to minimise global deforestation and forest
degradation driven by its consumption of certain commodities and products and
thereby seek to reduce its contribution to greenhouse gas emissions and global
biodiversity loss as well as promote sustainable production and consumption patterns
in the Union and globally. To have the greatest impact, Union policy should aim at
influencing the global market, not only supply chains to the Union. Partnerships and
efficient international cooperation with producer and consumer countries are
fundamental in that respect. 15 Halting deforestation and forest degradation is an essential part of the SDGs. This
Regulation should contribute in particular to meeting the goals regarding life on land
SDG 15, climate action SDG 13, responsible consumption and production SDG
12, zero hunger SDG 2 and good health and well-being SDG 3. The relevant target
15.2 to halt deforestation by 2020 has not been met, underlining the urgency of
ambitious and effective action. Forests
December
Council conclusions on the Communication on Stepping Up EU Action to Protect and Restore the
at
16
Worlds
16
httpswww.consilium.europa.eumedia41860st15151-en19.pdf. 17
European Parliament resolution of 22 October 2020 with recommendations to the Commission on an
EU legal framework to halt and reverse EU-driven global deforestation 20202006INL Available at
httpswww.europarl.europa.eudoceodocumentTA-9-2020-0285_EN.html. 18
19
rainforests under pressure as agricultural expansion drives global deforestation.
Trade policy must play
its full role in the recovery from the COVID-19 pandemic and in the green and digital
transformations of the economy and towards building a more resilient Europe in the
world. 20 This Regulation should be complementary to other measures proposed in the
Commission Communication Stepping up EU Action to Protect and Restore the
Worlds Forests24, in particular 1 working in partnership with producer countries, to
20
21
22
23
24
httpsunfccc.intnewsnew-york-declaration-on-forests. httpswww.un.orgesaforestswp-contentuploads201612UNSPF_AdvUnedited.pdf. httpsukcop26.orgglasgow-leaders-declaration-on-forests-and-land-use. Communication from the Commission to the European Parliament, the Council, the European,
Economic and Social Committee and the Committee of the Regions, Trade Policy Review - An Open,
Sustainable and Assertive Trade Policy, COM2021 66 final, 18 February 2021. COM2019 352 final. EN
25
EN
support them in addressing root causes of deforestation, such as weak governance,
international
law enforcement and corruption, and 2 strengthen
ineffective
cooperation, with major consumer countries, to promote the adoption of similar
measures to avoid products coming from supply chains associated with deforestation
and forest degradation being placed on their markets. 21 The Commission should continue to work in partnership with producer countries, and
more generally in cooperation with international organisations and bodies, and should
be reinforcing its support and incentives with regard to protecting forests and
transition to deforestation-free production, acknowledging the role of indigenous
people, improving governance and land tenure, increasing law enforcement and
promoting sustainable forest management, climate-resilient agriculture, sustainable
intensification and diversification, agro-ecology and agroforestry. In doing so it should
acknowledge the role of indigenous people in protecting forests. Building upon the
experience and lessons learned in the context of the already existing initiatives, the
Union and the Member States should work in partnership with producer countries,
upon their request, to exploit the multi-functionalities of forest, support them in the
transition to sustainable forest management, and address global challenges while
meeting local needs and paying attention to the challenges faced by smallholders in
line with the Communication to Stepping up Action to Protect and Restore the
Worlds Forests. The partnership approach should help producer countries in
protecting, restoring and sustainably using forest, hence contributing to the objective
of this Regulation to reduce deforestation and forest degradation. 22 Another important action announced in the Communication is the establishment of the
EU Observatory on deforestation, forest degradation, changes in the worlds forest
cover and associated drivers EU Observatory launched by the Commission in
order to better monitor changes in the worlds forest cover and related drivers. Moreover, building on already existing monitoring tools, including Copernicus
products, the EU Observatory will facilitate access to information on supply chains for
public entities, consumers and business, providing easy-to-understand data and
information linking deforestation, forest degradation, and changes in the worlds forest
cover to EU demandtrade for commodities and products. The EU Observatory will
thus directly support the implementation of this Regulation by providing scientific
evidence in regard to global deforestation and forest degradation and related trade. The
EU Observatory will cooperate closely with relevant international organisations,
research institutes, and third countries. 23 The existing EU legislative framework focuses on tackling illegal logging and
associated trade and does not address deforestation directly.
It consists of Regulation
EU No 9952010 of the European Parliament and of the Council, laying down the
obligations of operators who place timber and timber products on the market25, and
Council Regulation EC No 21732005, on the establishment of a Forest Law
Enforcement, Governance and Trade licensing scheme for imports of timber into the
European Community26. Both Regulations were evaluated in a Fitness Check which
determined that, while the legislation has had a positive impact on forest governance,
the objectives of the two Regulations namely to curb illegal logging and related
trade, and to reduce the consumption of illegally harvested timber in the EU have not
25
26
OJ L 295, 12.11.2010, p. 23. OJ L 347, 30.12.2005, p.
1. EN
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been met27 and it was concluded that focusing solely on legality of timber was not
sufficient to meet the set objectives. 24 Available reports confirm that a sizable part of ongoing deforestation is legal
according to the laws of the country of production. A recent report28 estimates that
between 2013 and 2019, around 30 of deforestation destined to commercial
agriculture in tropical countries was legal. Available data tend to focus on countries
with weak governance the global share of deforestation that is illegal might be
lower, but already provide clear data signalling that leaving out deforestation that is
legal in the country of production undermines the effectiveness of policy measures. 25 The impact assessment of possible policy measures to address Union-driven
deforestation and forest degradation, Council conclusions and the 2020 resolution of
the European Parliament clearly identify the need to establish deforestation and forest
degradation as the guiding criteria for future Union measures. Therefore, the new
Union legal framework should address both legality and whether the production of
relevant commodities and products is deforestation-free. 26 The definition of deforestation-free should be sufficiently broad to cover both
deforestation and forest degradation, it should provide legal clarity, and it should be
measurable based on quantitative, objective and internationally recognised data. 27 The Regulation should cover those commodities whose Union consumption is the
most relevant in terms of driving global deforestation and forest degradation and for
which a Union policy intervention could bring highest benefits per unit value of trade. An extensive review of scientific literature, namely of primary sources estimating the
impact of EU consumption on global deforestation and linking that footprint to
specific commodities, was carried out as a part of the study supporting the Impact
Assessment and cross-checked via extensive consultation with stakeholders. That
process delivered a first list of eight commodities. Wood was directly included in the
scope as it was already covered by the EUTR. The list of the commodities was then
further reduced via an efficiency analysis in the Impact Assessment. This efficiency
analysis compared the hectares of deforestation linked to EU consumption, as
estimated in a recent research paper29, for each of those commodities with their
average value of EU imports. According to the research paper used for the efficiency
analysis, six commodities represent the largest share of EU-driven deforestation
among the total of eight commodities analysed in that research paper palm oil
33,95, soy 32,83, wood 8,62, cocoa 7,54, coffee 7,01 and beef
5,01. 28 Bearing in mind that the use of recycled relevant commodities and products should be
encouraged, and that including such commodities and products in the scope of this
Regulation would place a disproportionate burden on operators, used commodities and
products that have completed their lifecycle, and would otherwise be disposed of as
waste, should be excluded from the scope of this Regulation. 29 Obligations concerning relevant commodities and products should be laid down by
this Regulation in order to effectively combat deforestation, forest degradation, and to
promote deforestation-free supply chains. httpsec.europa.euinfolawbetter-regulationhave-your-sayinitiatives11630-Illegal-logging-
27
evaluation-of-EU-rules-fitness-check-_en
28
29
httpswww.forest-trends.orgwp-contentuploads202105Illicit-Harvest-Complicit-Goods_rev.pdf. Pendrill F., Persson U. M., Kastner, T.
2020. EN
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30 Many international organisations and bodies e.g. Food and Agriculture Organization
of the United Nations, the Intergovernmental Panel on Climate Change, United
Nations Environment Programme, the Paris Agreement, International Union for the
Conservation of Nature, Convention on Biological Diversity have developed work in
the field of deforestation and forest degradation and the definitions in this Regulation
build on this work. 31 A cut-off date should be set to provide a basis for the evaluation of whether concerned
land has been subject to deforestation or forest degradation, meaning that no
commodities and products in the scope of this Regulation would be allowed to enter
the Union market or be exported if they were produced on land subject to deforestation
or forest degradation after that date. It should allow for the appropriate verification and
monitoring, correspond to existing international commitments, such as the SDGs and
the New York Declaration on Forests, thus minimising sudden disruption to supply
chains while removing any incentive to accelerate activities leading to deforestation
and forest degradation in view of the entry into force of this Regulation. 32 To strengthen the Unions contribution to halting deforestation and forest degradation,
and to ensure that commodities and products from supply chains related to
deforestation and forest degradation are not placed on the Union market, relevant
commodities and products should not be placed or made available on the Union
market, nor exported from the Union market unless they are deforestation-free and
have been produced in accordance with the relevant legislation of the country of
production. To confirm that this is the case, they should always be accompanied by a
due diligence statement. 33 On the basis of a systemic approach, operators should take the appropriate steps in
order to ascertain that the relevant commodities and products that they intend to place
on the Union market comply with the deforestation-free and legality requirements of
this Regulation. To that end, operators should establish and implement due diligence
procedures. The due diligence procedure required by this Regulation should include
three elements information requirements, risk assessment and risk mitigation
measures. The due diligence procedures should be designed to provide access to
information about the sources and suppliers of the commodities and products being
placed on the Union market, including information demonstrating that the absence of
deforestation and forest degradation and legality requirements are fulfilled, inter alia
by identifying the country and area of production, including geo-location coordinates
of relevant plots of land. These geo-location coordinates that rely on timing,
positioning andor Earth observation could make use of space data and services
delivered under the Unions Space programme EGNOSGalileo and Copernicus. On
the basis of this information, operators should carry out a risk assessment.
Where a
risk is identified, operators should mitigate such risk to achieve no or negligible risk. Only after completing the required steps of the due diligence procedure and
concluding that no or negligible risk exists that the relevant commodity or product is
not compliant with this Regulation, should the operator be allowed to place the
relevant commodity or product on the Union market or to export it. 34 Operators should formally assume responsibility for the compliance of the relevant
commodities or products that they intend to place on the Union market or to export by
making available due diligence statements. A template for such statements should be
provided by this Regulation. This is expected to facilitate enforcement of this
Regulation through competent authorities and courts as well as increase compliance by
operators. EN
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35
In order to recognise good practice, certification or other third party verified schemes
could be used in the risk assessment procedure, however, they should not substitute
the operators responsibility as regards due diligence. 36 Traders should be responsible for collecting and keeping information ensuring the
transparency of the supply chain of relevant commodities and products which they
make available on the market. Large traders that are not small and medium-sized
enterprises SMEs have a significant influence on supply chains and play an
important role in ensuring that they are deforestation-free and should therefore have
the same obligations as operators. 37
In order to foster transparency and facilitate enforcement, operators which are not
SMEs should, on an annual basis, publicly report on their due diligence system,
including on the steps taken to implement their obligations. 38 Other EU legislative instruments that set out due diligence requirements in the value
chain with regard to adverse human rights or environmental impacts should apply in
so far as there are no specific provisions with the same objective, nature and effect in
this Regulation which may be adapted in the light of future legislative amendments. The existence of this Regulation should not exclude the application of other EU
legislative instruments that lay down requirements regarding value chain due
diligence. Where such other EU legislative instruments provide for more specific
provisions or add requirements to the provisions laid down in this Regulation, such
provisions should be applied in conjunction with those of this Regulation. Furthermore, where this Regulation contains more specific provisions, they should not
be interpreted in a way that undermines the effective application of other EU
legislative instruments on due diligence or the achievement of their general aim. 39 Operators falling within the scope of other EU legislative instruments that set out due
diligence requirements in the value chain with regard to adverse human rights or
environmental impacts should be in a position to fulfil the reporting obligations under
this Regulation by including the required information when reporting under the other
EU legislative instrument. 40 Responsibility for enforcing this Regulation should lie with the Member States, and
their competent authorities should be required to ensure that this Regulation is fully
complied with. A uniform enforcement of this Regulation as regards relevant
commodities and products entering or leaving the Union market can only be achieved
through systematic exchange of information and cooperation amongst competent
authorities, customs authorities and the Commission. 41 The effective and efficient implementation and enforcement of this Regulation are
essential to achieving its goals. To this end, the Commission should set up and manage
an information system to support the operators and the competent authorities in
presenting and accessing the necessary information on relevant commodities and
products placed on the market. The operators should submit the due diligence
statements to the information system. The information system should be accessible to
competent authorities and customs authorities to facilitate fulfilling their obligations
under this Regulation. The information system should also be accessible for a wider
public, with the anonymised data provided in an open and machine-readable format in
line with the Unions Open Data Policy. 42 For the relevant commodities entering or leaving the Union market, competent
authorities are tasked with the verification of the compliance of relevant commodities
EN
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and products with the obligations under this Regulation, whereas the role of customs is
to ensure that the reference of a due diligence statement is made available in the
customs declaration where applicable and, in addition as from the moment the
electronic interface will be in place to exchange information between customs
authorities and competent authorities, to check the status of the due diligence
statement after an initial risk analysis carried out by competent authorities in the
Information System and act accordingly i.e. suspend or refuse a commodity or
product if requested to do so through the status in the Information System.
This
specific organisation of controls discards the application of Chapter VII of Regulation
EU 20191020 in so far as the application and enforcement of this Regulation is
concerned. 43 Member States should ensure that adequate financial resources are always available
for the appropriate staffing and equipping of the competent authorities. Efficient
checks are demanding in terms of resources, and stable resources should be provided
at a level appropriate to the enforcement needs at any given moment. Member States
should have the possibility to supplement public financing by reclaiming from the
relevant economic operators the costs incurred when performing checks in relation to
relevant commodities and products that were found to be non-compliant. 44 This Regulation is without prejudice to other Union legislation on goods and products
entering or leaving the Union market, in particular the provisions of the Union
Customs Code as regards the powers of customs authorities and customs controls. Importers should be reminded that Articles 220, 254, 256, 257 and 258 of Regulation
EU No 9522013 of the European Parliament and of the Council provide that
products entering the Union market that require further processing shall be placed
under the appropriate customs procedure allowing such processing.
Generally, the
release for free circulation or export should not be deemed to be proof of conformity
with Union law, since such a release does not necessarily include a complete control of
compliance. 45
In order to optimise and unburden the control process of relevant commodities and
products entering or leaving the Union market, it is necessary to set up electronic
interfaces that allow the automatic data transfer between customs systems and the
Information System of competent authorities. The EU Single Window environment for
customs is the natural candidate to support such data transfers. The interfaces should
be highly automated and easy-to-use, and additional burden for customs authorities
should be limited. Moreover, in view of the limited differences between the data to be
declared respectively in the customs declaration and the due diligence statement, it is
appropriate to propose also a business-to-government approach whereby traders and
economic operators make available the due diligence statement of a relevant
commodity or product via national single window environment for customs and this
statement is transmitted automatically to the Information System used by competent
authorities.
Customs authorities and competent authorities should contribute to
determine the data to be transmitted and any other technical requirement. 46 The risk of non-compliant commodities and products being placed on the Union
market varies depending on the commodity and product as well as on its country of
origin and production. Operators sourcing commodities and products from countries or
parts thereof that present a low risk of growing, harvesting or producing relevant
commodities in violation of this Regulation should be subject to fewer obligations,
thereby reducing compliance costs and administrative burden.
Commodities and
EN
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products from high-risk countries or parts thereof should be subject to enhanced
scrutiny by the competent authorities. 47 For this reason, the Commission should assess the deforestation and forest degradation
risk at a level of a country or parts thereof based on a range of criteria that reflect both
quantitative, objective and internationally recognised data, and indications that the
countries are actively engaged in fighting deforestation and forest degradation. This
benchmarking information should make it easier for operators in the Union to exercise
due diligence and for competent authorities to monitor and enforce compliance, while
also providing an incentive for producer countries to increase the sustainability of their
agricultural production systems and reduce their deforestation impact. This should
help making supply chains more transparent and sustainable. This benchmarking
system should be based on a three-tier classification of countries to be regarded as
low, standard or high risk. In order to ensure appropriate transparency and clarity, the
Commission should in particular make publicly available the data being used for
benchmarking, the reasons for the proposed change of classification and the reply of
the country concerned. For relevant commodities and products from low risk countries
or parts of countries identified as low-risk, operators should be allowed to apply a
simplified due diligence, whilst competent authorities should be required to apply
enhanced scrutiny on relevant commodities and products from high risk countries or
parts of countries identified as high-risk. The Commission should be empowered to
adopt implementing measures to establish the countries or parts thereof that present a
low or high risk of producing relevant commodities and products that are not
compliant with this Regulation. 48 Competent authorities should carry out checks at regular intervals on operators and
traders to verify that they effectively fulfil the obligations laid down in this
Regulation. Moreover, competent authorities should carry out checks when in
possession of and based on relevant information, including substantiated concerns
submitted by third parties. For a comprehensive coverage of the relevant commodities
and products, the respective operators and traders and the volumes of their share of
commodities and products, a twofold approach should apply. Competent authorities
should thus be required to check on a certain percentage of operators and traders,
whilst also covering a specific percentage of relevant commodities and products. Such
percentages should be higher for relevant commodities and products from high-risk
countries or parts thereof. 49 The checks of operators and traders by competent authorities should cover the due
diligence systems and the compliance of the relevant commodities and products with
the provisions of this Regulation. The checks should be based on a risk-based plan of
checks. The plan should contain risk criteria that enable competent authorities to carry
out a risk analysis of the due diligence statements submitted by operators and traders. The risk criteria should take into account the risk of deforestation associated to
relevant commodities and products in the country of production, the history of
compliance of operators and traders with the obligations of this Regulation and any
other relevant information available to competent authorities. The risk analysis of due
diligence statements should allow competent authorities the identification of operators,
traders and relevant commodities and products to be checked, and should be carried
out using electronic data processing techniques in the information system which
collects the due diligence statements. 50
In case the risk analysis of the due diligence statements reveals a high risk of non-
compliance of specific relevant commodities and products, the competent authorities
EN
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should be able to take immediate interim measures to prevent their placing or making
available on the Union market. In case such relevant commodities and products were
entering or leaving the Union market, the competent authorities should request from
customs authorities the suspension of the release for free circulation or the export to
enable competent authorities to carry out the necessary checks. Such request should be
communicated by means of the interface system between customs and competent
authorities. Suspension of the placing or making available on the Union market, of the
release for free circulation or of export should be limited to three working days except
where the competent authorities require additional time to assess the compliance of the
relevant commodities and products with this Regulation.
In that case, the competent
authorities should take additional interim measures to extend the suspension period or
request such extension to customs authorities in case of relevant commodities and
products entering or leaving the Union market. 51 The plan for checks should be regularly updated on the basis of the results of its
implementation. Those operators showing a consistent track record of compliance
should be subject to a reduced frequency of checks. 52
In order to ensure implementation and effective enforcement of this Regulation,
Member States should have the power to withdraw and recall non-compliant relevant
commodities and products and take appropriate corrective actions.
In particular, to ensure equal participation in the
preparation of delegated acts, the European Parliament and the Council should receive
all documents at the same time as Member States experts, and their experts should
systematically have access to meetings of Commission expert groups dealing with the
preparation of delegated acts. 56 Regulation EU No 9952010 prohibits the placing of illegally harvested timber and
timber products on the Union market. It lays down obligations for operators placing
timber on the market for the first time to exercise due diligence and for traders to keep
a traceable record of their suppliers and customers. This Regulation should retain the
obligation to ensure the legality of relevant commodities and products, including wood
and wood products, placed on the Union market and complements them with the
requirement on sustainability. This Regulation and
the related Commission
Implementing Regulation EU No 6072012 are therefore rendered redundant by this
Regulation and should be repealed. 57 Regulation EC No 21732005 lays down Union procedures for the implementation of
a FLEGT licensing scheme through bilateral Voluntary Partnership Agreements
VPAs with timber-producing countries. To respect bilateral commitments that the
European Union has entered into and to preserve the progress achieved with partner
countries that have an operating system in place FLEGT licensing stage, this
Regulation should include a provision declaring wood and wood-based products
covered by a valid FLEGT license as fulfilling the legality requirement under this
Regulation. 58 While this Regulation addresses deforestation and forest degradation, as envisaged in
the 2019 Communication Stepping up EU Action to Protect and Restore the Worlds
Forests, protecting forests should not lead to the conversion or degradation of other
natural ecosystems. Ecosystems such as wetlands, savannahs and peatlands are highly
significant to global efforts to combat climate change, as well as other sustainable
development goals and their conversion or degradation require particular urgent
attention. An evaluation of the need and the feasibility of extending the scope of this
Regulation to other ecosystems than forests should therefore be undertaken within 2
years of the entry into force of this Regulation. 59 Where, for the purposes of this Regulation, it is necessary to process personal data,
these are to be handled in accordance with Union law on the protection of personal
data.
It includes all plantations of the commodities
in Annex I other than wood
plantation forest means a planted forest that is intensively managed and meets, at
planting and stand maturity, all the following criteria one or two species, even age
class, and regular spacing. It includes short rotation plantations for wood, fibre and
energy, and excludes forests planted for protection or ecosystem restoration, as well
as forests established through planting or seeding which at stand maturity resemble
or will resemble naturally regenerating forests
EN
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5
6
7
planted forest means forest predominantly composed of trees established through
planting andor deliberate seeding provided that the planted or seeded trees are
expected to constitute more than fifty percent of the growing stock at maturity it
includes coppice from trees that were originally planted or seeded
forest degradation means harvesting operations that are not sustainable and cause a
reduction or loss of the biological or economic productivity and complexity of forest
ecosystems, resulting in the long-term reduction of the overall supply of benefits
from forest, which includes wood, biodiversity and other products or services
sustainable harvesting operations means harvesting that is carried out considering
maintenance of soil quality and biodiversity with the aim of minimising negative
impacts, in a way that avoids harvesting of stumps and roots, degradation of primary
forests or their conversion into plantation forests, and harvesting on vulnerable soils
minimises large clear-cuts and ensures locally appropriate thresholds for deadwood
extraction and requirements to use logging systems that minimise impacts on soil
quality, including soil compaction, and on biodiversity features and habitats
8
deforestation-free means
a
that the relevant commodities and products, including those used for or
contained in relevant products, were produced on land that has not been subject
to deforestation after December 31, 2020, and
b
that the wood has been harvested from the forest without inducing forest
degradation after December 31, 2020
produced means grown, harvested, raised, fed from or obtained on relevant plot of
land
placing on the market means the first making available of a relevant commodity or
product on the Union market
making available on the market means any supply of a relevant commodity or
product for distribution, consumption or use on the Union market in the course of a
commercial activity, whether in return for payment or free of charge
operator means any natural or legal person who, in the course of a commercial
activity, places relevant commodities and products on the Union market or exports
them from the Union market
trader means any natural or legal person in the supply chain other than the operator
who, in the course of a commercial activity, makes available on the Union market
relevant commodities and products
country of origin means a country or territory as defined in Article 60 of Regulation
EU No 9522013 of the European Parliament and of the Council32
country of production means the country or territory where the relevant commodity
or the relevant commodity used in the production of or contained in a product was
produced
negligible risk means a full assessment of both the product-specific and the general
information on compliance with Articles 3a and 3b by relevant commodities or
products showing no cause for concern
9
10
11
12
13
14
15
16
32
down the Union Customs Code OJ L 269 10.10.2013, p. 1.
Regulation EU No 9522013 of the European Parliament and of the Council of 9 October 2013 laying
EN
35
EN
17
18
19
20
21
22
23
24
25
26
27
28
authorised representative means any natural or legal person established within the
Union who has received a written mandate from an operator to act on its behalf in
relation to specified tasks with regard to the operators obligations under this
Regulation
non-compliant products means relevant commodities and products that were not
produced in a deforestation-free manner, or were not produced in accordance with
the relevant legislation of the country of production, or both
plot of land is an extension of land within a single real-estate property, as
recognised by the laws of the country of production, and which enjoys sufficiently
homogeneous conditions as to allow to evaluate on the aggregate level the risk of
deforestation and forest degradation associated with commodities produced on that
extension of land
SMEs mean micro, small and medium-sized enterprises as defined in Directive
201334EU33
substantiated concern means well-founded claim based on objective and verifiable
information regarding non-compliance with the present Regulation and which may
require the intervention of competent authorities
competent authorities means the authorities designated under Article 131
customs authorities means customs authorities as defined in Article 5, point 1, of
Regulation EU No 9522013
release for free circulation means the procedure laid down in Article 201 of
Regulation EU No 9522013
export means the procedure laid down in Article 269 of Regulation EU No
9522013
relevant commodities and products entering the Union market means relevant
commodities and products from third countries placed under the customs procedure
release for free circulation and intended to be placed on the Union market or
intended for commercial use or consumption other than private within the customs
territory of the Union
relevant commodities and products leaving the Union market means relevant
commodities and products placed under the customs procedure export
relevant legislation of the country of production means the rules applicable in the
country of production concerning the legal status of the area of production in terms
of land use rights, environmental protection, third parties rights and relevant trade
and customs regulations under legislation framework applicable in the country of
production
Article 3
Prohibition
33
Directive 201334EU of the European Parliament and of the Council of 26 June 2013 on the annual
financial statements, consolidated financial statements and related reports of certain types of undertakings,
amending Directive 200643EC of the European Parliament and of the Council and repealing Council Directives
78660EEC and 83349EEC Text with EEA relevance OJ L 182, 29.6.2013, p. 1976. EN
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Relevant commodities and products may be placed or made available on the Union market, or
exported from the Union market only if all the following conditions are fulfilled
a
b
they are deforestation-free
they have been produced in accordance with the relevant legislation of the
country of production and
c
they are covered by a due diligence statement as laid down in Article 42. Chapter 2
Obligations of operators and traders
Article 4
Obligations of operators
1. 2. 3. 4. 5.
1. 2. 1. 2. 3. 4. 5. EN
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6. Traders shall offer all assistance necessary to competent authorities to facilitate the
performance of the checks under Article 16, including as regards access to premises
and the presentation of documentation or records. Article 7
Placing on the market by operators established in third countries
In case a natural or legal person established outside the Union places on the Union market
relevant commodities and products, the first natural or legal person established in the Union
who buys or takes possession of such relevant commodities and products shall be considered
operator within the meaning of this Regulation. Article 8
Due diligence
1. Prior to placing relevant commodities and products on the market or before exporting
them, operators shall exercise due diligence with regard to all relevant commodities
and products supplied by each particular supplier. 2. For the purposes of this Regulation, the due diligence shall include
a
the collection of information and documents needed to fulfil the requirements
set out in Article 9
b
risk assessment measures as referred to in Article 10
c
risk mitigation measures as referred to in Article 10.
Article 9
Information requirements
1. Operators shall collect information, documents and data demonstrating that the
relevant commodities and products are compliant with Article 3. For this purpose,
the operator shall collect, organise and keep for 5 years the following information
relating to the relevant commodities or products, supported by evidence
a
description, including the trade name and type of relevant commodities and
products as well as, where applicable, the common name of the species and its
full scientific name
b quantity expressed in net mass and volume, or number of units of the relevant
commodities and products
c
identification of the country of production
d geo-localisation coordinates, latitude and longitude of all plots of land where
the relevant commodities and products were produced, as well as date or time
range of production
e
f
name, email and address of any business or person from whom they have been
supplied with the relevant commodities or products
name, email and address of any business or person to whom the relevant
commodities or products have been supplied
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2. 3. 1. g
h
adequate and verifiable information that the relevant commodities and products
are deforestation-free
adequate and verifiable information that the production has been conducted in
accordance with relevant legislation of the country of production, including
any arrangement conferring the right to use the respective area for the purposes
of the production of the relevant commodity
The operator shall make available to the competent authorities upon request the
information, documents and data collected under this Article. The Commission may adopt delegated acts in accordance with Article 33 to
supplement paragraph 1 concerning further relevant information to be obtained that
may be necessary to ensure the effectiveness of the due diligence system. Article 10
Risk assessment and risk mitigation
Operators shall verify and analyse information collected in accordance with Article 9
and any other relevant documentation, and on this basis carry out a risk assessment to
establish whether there is a risk that the relevant commodities and products intended
to be placed on or exported from the Union market are non-compliant with the
requirements of this Regulation. If the operators cannot demonstrate that the risk of
non-compliance is negligible, they shall not place the relevant commodity or product
on the Union market nor export it.
2. The risk assessment shall take special account of the following risk assessment
criteria
a
b
c
d
e
f
g
h
the assignment of risk to the relevant country or parts thereof in accordance
with Article 27
the presence of forests in the country and area of production of the relevant
commodity or product
prevalence of deforestation or forest degradation in the country, region and
area of production of the relevant commodity or product
the source, reliability, validity and links to other available documentation of the
information referred to in Article 91
concerns in relation to the country of production and origin, such as level of
corruption, prevalence of document and data falsification, lack of law
enforcement, armed conflict or presence of sanctions imposed by the United
Nations Security Council or the Council of the European Union
the complexity of the relevant supply chain, in particular difficulties in
connecting commodities andor products to the plot of land where they were
produced
the risk of mixing with products of unknown origin or produced in areas where
deforestation or forest degradation has occurred or is occurring
the conclusions of the relevant Commission expert group meetings published in
the Commissions expert group register
i
substantiated concerns submitted under Article 29
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j
complementary information on compliance with this Regulation, which may
include information supplied by certification or other third-party-verified
schemes, including voluntary schemes recognised by the Commission under
Article 305 of Directive EU 2018200134, provided that the information
meets the requirements set out in Article 9
Wood products which are in scope of Council Regulation EC No 21732005 that
are covered by a valid FLEGT license from an operational licensing scheme shall be
deemed to be in compliance with Article 3b of this Regulation. Except where the analysis undertaken in accordance with paragraph 1 allows the
operator to ascertain that there is no or negligible risk that the relevant commodities
or products are not compliant with the requirements of this Regulation, the operator
shall adopt prior to placing the relevant commodities and products on the Union
market or to their export risk mitigation procedures and measures that are adequate to
reach no or negligible risk. This may include requiring additional information, data
or documents, undertaking independent surveys or audits or other measures
pertaining to information requirements set out in Article 9. Operators shall be able to demonstrate how the information gathered was checked
against the risk assessment criteria set out in paragraph 2, how a decision on risk
mitigation measures was taken and how the operator determined the degree of risk. Operators shall have in place adequate and proportionate policies, controls and
procedures to mitigate and manage effectively the risks of non-compliance of
relevant commodities and products identified. These shall include
a model risk management practices, reporting, record-keeping, internal control
and compliance management, including for operators that are not SMEs, the
appointment of a compliance officer at management level
b
an independent audit function to check the internal policies, controls and
procedures referred to in point a for all operators that are not SMEs. The risk assessments shall be documented, reviewed at least on an annual basis and
made available to the competent authorities upon request. The Commission may adopt delegated acts in accordance with Article 33 to
supplement paragraphs 2, 4 and 6 as regards relevant information to be obtained, risk
assessment criteria and risk mitigation measures that may be necessary to supplement
those referred to in this Article to ensure the effectiveness of the due diligence
system. Article 11
Maintenance of due diligence systems and record keeping
In order to exercise due diligence in accordance with Article 8, operators shall
establish and keep up to date a due diligence system to ensure that they can guarantee
compliance with the requirements set out in Article 3a and b. The due diligence
system shall be reviewed at least once a year and if necessary adapted to
and accounting for new developments which may influence the exercise of due
3. 4.
1. 34
Directive EU 20182001 of the European Parliament and of the Council of 11 December 2018 on the
promotion of the use of energy from renewable sources OJ L 32882, 21.12.2018, p. 82209. EN
41
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diligence. Operators shall keep record of updates in the due diligence systems for
5 years. Unless otherwise provided by other EU legislative instruments that lay down
requirements regarding sustainability value chain due diligence, operators which are
not SMEs shall, on an annual basis, publicly report as widely as possible, including
on the internet, on their due diligence system including on the steps taken by them to
implement their obligations as set out in Article 8. Operators falling also within the
scope of other EU legislative instruments that lay down requirements regarding value
chain due diligence may fulfil their reporting obligations under this paragraph by
including the required information when reporting in the context of other EU
legislative instruments. Operators shall keep for at least 5 years all documentation related to due diligence,
such as all relevant records, measures and procedures pursuant to Article 8. They
shall make them available to the competent authorities upon request. Article 12
Simplified due diligence
When placing relevant commodities or products on the Union market or exporting
them from it, operators are not required to fulfil the obligations under Article 10
where they can ascertain that all relevant commodities and products have been
produced in countries or parts thereof that were identified as low risk in accordance
with Article 27. However, if the operator obtains or is made aware of any information that would
point to a risk that the relevant commodities and products may not fulfil the
requirements of this Regulation, all obligations of Article 9 and 10 have to be
fulfilled. Chapter 3
Obligations of Member States and their competent authorities
Article 13
Competent authority
Member States shall designate one or more competent authorities responsible for
carrying out the obligations arising from this Regulation. By three months after the date of entry into force of this Regulation, Member States
shall notify the Commission of the names, addresses and contact details of the
competent authorities designated pursuant to paragraph 1. Member States shall
inform the Commission without undue delay of any changes to this information. The Commission shall make the list of the competent authorities publicly available
on its website. The Commission shall regularly update the list, based on relevant
updates received from Member States. 2.
3. 1. 2. 1. 2. 3. EN
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4. 5. 6. 7. 1. 2. 3. 4. 5. 6. Member States shall ensure that the competent authorities have adequate powers and
resources to perform the obligations set out in Chapter 3 of this Regulation. Without prejudice to the operators obligation to exercise due diligence as set out in
Article 8, Member States may provide technical and other assistance and guidance to
operators, taking into account the situation of SMEs, in order to facilitate compliance
with the requirements of this Regulation. Member States, may facilitate the exchange and dissemination of relevant
information, in particular with a view to assisting operators in assessing risk as set
out in Article 9, and on best practices regarding the implementation of this
Regulation.
Assistance shall be provided in a manner which does not compromise the
independence, legal obligations and responsibilities of competent authorities in
enforcing this Regulation. Article 14
Obligation to perform checks
The competent authorities shall carry out checks to establish whether operators and
traders comply with their obligations under this Regulation and whether the relevant
commodities and products placed or made available on the Union market or exported
from it are compliant with the requirements of this Regulation. The checks referred to in paragraph 1 shall be conducted in accordance with
Article 15 and 16. To carry out the checks referred to in paragraph 1, the competent authorities shall
establish a plan based on a risk-based approach. The plan shall contain at least risk
criteria to carry out the risk analysis under paragraph 4 and thereby inform the
decisions on checks. In establishing and reviewing the risk criteria, the competent
authorities shall take into account in particular the assignment of risk to countries or
parts thereof in accordance with Article 27, the history of compliance of an operator
or trader with this Regulation and any other relevant information. Based on the
results of the checks and the experience on implementation of the plans, the
competent authorities shall review those plans and risk criteria on a regular basis in
order to improve their effectiveness. When reviewing the plans, the competent
authorities shall establish a reduced frequency of checks for those operators and
traders who have shown a consistent record of full compliance with the requirements
under this Regulation. In order to implement the risk-based plans of checks established under paragraph 3,
the competent authorities shall carry out risk analysis of the information contained in
the due diligence statements made available to them according to Article 42. The
risk analysis shall use the risk criteria included in the plans established under
paragraph 3, and shall be carried out by means of electronic data-processing
techniques integrated in the information system set out in Article 31. Based on the risk analysis under paragraph 4 and any other relevant information, the
competent authorities shall identify the operators and traders to be checked according
to Articles 15 and 16. Based on the risk analysis under paragraph 4, competent authorities shall also
identify relevant commodities and products that call for immediate action because
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they present such high risk of non-compliance with the provisions of this Regulation
that require to be checked before they are placed or made available on the Union
market or exported. Such identification shall be flagged in the information system
established under Article 31 and shall result in competent authorities taking
immediate interim measures under Article 21 to suspend the placing or making
available on the Union market of the relevant commodities and products or, in the
case of relevant commodities or products entering or leaving the Union market and
once the electronic interface referred to in Article 261 is in place, in the request to
customs authorities for suspension under Article 246 of their release for free
circulation or export. The suspensions referred to in paragraph 6 shall end within 3 working days unless
the competent authorities, based on the result of the checks conducted within that
period, conclude that they require additional time to establish whether the relevant
commodities and products comply with the requirements of this Regulation. In such
case, the competent authorities shall extend the period of suspension by means of
additional interim measures taken under Article 21 or, in the case of relevant
commodities or products entering or leaving the Union market, by notifying the
customs authorities of the need to maintain the suspension under Article 246. the
Competent authorities shall exchange
development and application of the risk criteria referred to in paragraph 3 with
competent authorities of other Member States and with the Commission, in order to
improve the effectiveness of the enforcement of this Regulation. information on and coordinate
Each Member State shall ensure that the annual checks carried out by their
competent authorities cover at least 5 of the operators placing, making available on
or exporting from the Union market each of the relevant commodities on their market
as well as 5 of the quantity of each of the relevant commodities placed or made
available on or exported from their market. For relevant commodities and products produced in a country or parts thereof listed
as high risk in accordance with Article 27 or if there is a risk of relevant commodities
or products produced in such countries or parts thereof entering the relevant supply
chain, the competent authority shall carry out enhanced scrutiny specified in Article
20. Without prejudice to the checks under paragraphs 5 and 6, competent authorities
shall conduct checks referred to in paragraph 1 when they are in possession of
evidence or other relevant information, including based on substantiated concerns
provided by third parties under Article 29, concerning potential non-compliance with
this Regulation. Checks shall be carried out without prior warning of the operator or trader, except
where prior notification of the operator or trader is necessary in order to ensure the
effectiveness of the checks. The competent authorities shall keep records of the checks indicating in particular
their nature and results, as well as on the measures taken in case of non-compliance. Records of all checks shall be kept for at least 5 years. Article 15
Checks on operators
7. 8.
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1. The checks on operators shall include
a
b
c
examination of the due diligence system, including risk assessment and risk
mitigation procedures
examination of documentation and records that demonstrate the proper
functioning of the due diligence system
examination of documentation and records that demonstrate the compliance of
a specific product or commodity that the operator has placed, intends to place
on or export from the Union market with the requirements of this Regulation
d
examination of due diligence statements
and, where appropriate,
e
f
g
h
on the ground examination of relevant commodities and products with a view
to ascertaining their conformity to the documentation used for exercising due
diligence
any technical and scientific means adequate to determine the exact place where
the relevant commodity or product was produced, including isotope testing
any technical and scientific means adequate to determine whether the relevant
commodity or product are deforestation-free, including Earth observation data
such as from Copernicus programme and tools, and
spot checks, including field audits, including where appropriate in third
countries through cooperation with the administrative authorities of third
countries. Article 16
Checks on traders
1. The checks on traders shall include
a
examination of documentation and records that demonstrate the compliance
with Article 62
b
where appropriate, spot checks, including field audits. Article 17
Recovery of costs by competent authorities
1. 2. Member States may authorise their competent authorities to reclaim from the
operators or traders the totality of the costs of their activities with respect to instances
of non-compliance. The costs referred to in paragraph 1 may include the costs of carrying out testing, the
costs of storage and the costs of activities relating to products that are found to be
non-compliant and are subject to corrective action prior to their release for free
circulation, their placing on or exporting from the Union market. Article 18
Cooperation and exchange of information
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1. 2. 3. 4. 5. 1.
2. Competent authorities shall cooperate with each other, with authorities from other
Member States, with the Commission, and if necessary, with administrative
authorities of third countries in order to ensure compliance with this Regulation. For the application and enforcement of this Regulation, competent authorities shall
the
establish administrative arrangements with
transmission of information and the conduct of investigations. the Commission concerning
Competent authorities shall exchange information necessary for the enforcement of
this Regulation. This shall include giving access to and exchange of data on
operators and traders including due diligence statements with other Member States
competent authorities to facilitate the enforcement of this Regulation. Competent authorities shall immediately alert competent authorities of other Member
States and the Commission when they detect infringement of this Regulation and
serious shortcomings that may affect more than one Member State. Competent
authorities shall, in particular, inform competent authorities of other Member States
when they detect a relevant commodity or product on the market that is not
compliant with this Regulation, to enable the withdrawal or recall of such commodity
or product from sales in all Member States. At the request of a competent authority, Member States shall provide to it the
necessary information to ensure compliance with this Regulation. Article 19
Reporting
Member States shall make available to the public and the Commission, at the latest
by 30 April of each year, information on the application of this Regulation during the
previous calendar year. This information shall include their plans for checks, the
number and the results of the controls carried out on operators and traders, including
the contents of these checks, the volume of relevant commodities and products
checked in relation to the total quantity of relevant commodities and products placed
on the market, the countries of origin and of production of relevant commodities and
products as well as the measures taken in case of non-compliance and the costs of
controls recovered. The Commission services shall make publicly available, on an annual basis, a Union-
wide overview of the application of this Regulation based on the data submitted by
the Member States under paragraph 1. Article 20
Enhanced scrutiny
Where relevant commodities or products were produced in a country or part thereof listed as
high risk in accordance with Article 27, or there is a risk of relevant commodities or products
produced in such countries or parts thereof entering the relevant supply chain, each Member
State shall ensure that the annual checks carried out by their competent authorities cover at
least 15 of the operators placing, making available on or exporting from the Union market
each of the relevant commodities on their market as well as 15 of the quantity of each of the
relevant commodities placed or made available on or exported from their market from high
risk countries or parts thereof. EN
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Article 21
Interim measures
Where, following the checks referred to in Article 15 and 16, possible serious shortcomings
have been detected, or risks have been identified pursuant to Article 146, the competent
authorities may take immediate interim measures, including seizure or suspension of the
placing or making available on and exporting from the Union market of the relevant
commodities and products. 1.
2. 3. 1. 2. Article 22
Market surveillance measures
Without prejudice to Article 23, where competent authorities establish that an
operator or trader has not complied with its obligations under this Regulation or that
a relevant commodity or product is not compliant with this Regulation, they shall
without delay require the relevant operator or trader to take appropriate and
proportionate corrective action to bring the non-compliance to an end. For the purposes of paragraph 1, the corrective action required to be taken by the
operator or trader shall include at least one or more of the following
a
b
c
d
rectifying any formal non-compliance, in particular with the requirements of
Chapter 2 of this Regulation
preventing the relevant commodity or product from being placed, made
available on or exported from the Union the market
withdrawing or recalling the relevant commodity or product immediately
destroying the relevant commodity or product or donating it to charitable or
public interest purposes. If the operator or trader fails to take corrective action referred to in paragraph 2 or
where the non-compliance referred to in paragraph 1 persists, competent authorities
shall ensure that the product is withdrawn or recalled, or that its being made available
on or exported from the Union market is prohibited or restricted. Article 23
Penalties
Member States shall lay down rules on penalties applicable to infringements of the
provisions of this Regulation by operators and traders and shall take all measures
necessary to ensure that they are implemented. Member States shall notify the
Commission of those provisions and without delay of any subsequent amendments
affecting them. The penalties provided for shall be effective, proportionate and dissuasive. Penalties
shall include as a minimum
a
fines proportionate to the environmental damage and the value of the relevant
commodities or products concerned, calculating the level of such fines in such
way as to make sure that they effectively deprive those responsible of the
economic benefits derived from their infringements, and gradually increasing
the level of such fines for repeated infringements the maximum amount of
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such fines shall be at least 4 of the operators or traders annual turnover in
the Member State or Member States concerned
confiscation of the relevant commodities and products concerned from the
operator andor trader
confiscation of revenues gained by the operator andor trader from a
transaction with the relevant commodities and products concerned
b
c
d
temporary exclusion from public procurement processes. Chapter 4
Procedures for relevant commodities and products entering or
leaving the Union market
Article 24
Controls
1. 2. 3.
4. Relevant commodities and products placed under the customs procedure release for
free circulation or export shall be subject to the controls and measures laid down
in this Chapter. The application of this Chapter is without prejudice to any other
provisions of this Regulation as well as to other Union legislation governing the
release for free circulation or export of goods, in particular the Union Customs Code
and its Articles 46, 47, 134 and 267. Chapter VII of Regulation EU No. 20191020
of the European Parliament and of the Council35 shall however not apply to controls
on relevant commodities and products entering the Union market in so far as the
application and enforcement of this Regulation is concerned. Competent authorities shall be responsible for the overall enforcement of this
Regulation with regard to a relevant commodity and product entering or leaving the
Union market. In particular, competent authorities shall be responsible of
establishing, through the checks under Article 141, whether any such relevant
commodity or product complies with the requirements of this Regulation. The
competent authorities shall carry out these duties in accordance with the relevant
provisions of Chapter 3 of this Regulation. Customs authorities shall control the correct declaration of relevant commodities and
products entering or leaving the Union market. Such controls shall be based
primarily on risk analysis, with the purpose of identifying and evaluating the risks
and developing the necessary countermeasures, and shall be performed within a
common risk management framework on the Union level. The reference number of the due diligence statement assigned by the information
system referred to in Article 31 in relation to a relevant commodity or product
entering or leaving the Union shall be made available to customs authorities when
lodging the customs declaration for release for free circulation or export of that
35
Regulation EU 20191020 of the European Parliament and of the Council of 20 June 2019 on market
surveillance and compliance of products and amending Directive 200442EC and Regulations EC No
7652008 and EU No 3052011. EN
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5. 6. 7.
8. relevant commodity or product, except where the due diligence statement is lodged
pursuant to Article 262. Upon receipt of a customs declaration for release for free circulation or export of a
relevant commodity or product entering or leaving the Union market, customs
authorities shall verify the status of the due diligence statement using the electronic
interface referred to in Article 261. Any change of status in the Information System
referred to in Article 31, which takes place before the release for free circulation or
export of that relevant commodity or product, shall be notified automatically to the
customs authorities supervising that relevant commodity or product. Where following the risk analysis under Article 144 the status of the corresponding
due diligence statement indicates in the information system established under
Article 31 that a relevant commodity or product requires to be checked before placed
or made available on the EU market or exported, customs authorities shall suspend
the release for free circulation or export of that relevant commodity or product. Where all other requirements and formalities under Union or national law relating to
the release for free circulation or export have been fulfilled, customs authorities shall
allow a relevant commodity or product to be released for free circulation or exported
in any of the following circumstances
a Following the risk analysis under Article 144, competent authorities have not
indicated in the information system established under Article 31 that relevant
commodity or product as requiring the suspension of release for free
circulation or of the export pursuant to paragraph 6
b Where the release for free circulation or export has been suspended in
accordance with paragraph 6, the competent authorities have not requested,
within the 3 working days indicated in Article 147, the need to maintain the
suspension of the release for free circulation or export of that relevant
commodity or product
c Where competent authorities have notified customs authorities through the
information system established under Article 31 that the suspension of the
release for free circulation or export of the relevant commodities and products
can be lifted. The release for free circulation or export shall not be deemed proof of compliance
with Union law and, in particular, with this Regulation. the customs authorities accordingly
Where the competent authorities conclude that a relevant commodity or product
entering or leaving the Union market is not compliant with this Regulation, they shall
notify
information system
established under Article 31. Competent authorities may also indicate in the
information system that they object to placing the relevant commodity or product
under other specific customs procedures. through
the
Upon notification of that status, customs authorities shall not allow the release for
free circulation or export of that relevant commodity or product. They shall also
include the following notice in the customs data-processing system and, where
possible, on the commercial invoice accompanying the relevant commodity or
product and on any other relevant accompanying document Non-compliant
commodity or product release for free circulationexport not authorised
Regulation EU 2021XXXX. OP to indicate reference of this Regulation
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Where the relevant commodity or product is subsequently declared for other customs
procedures and provided that the competent authorities did not object to such
placement, the notice shall be included by operator in the customs declarations and
registered, under the same conditions, in the customs data-processing system and,
where possible, on the accompanying documents used in connection with any such
procedures. Notifications and requests under paragraphs 5 to 8 of this Article shall take place by
means of the electronic interface referred to in Article 261. Paragraphs 5 to 8 shall
apply once the electronic interface referred to in Article 261 is in place. Customs authorities may destroy a non-compliant relevant commodity or product
upon the request of the competent authorities or where they deem it necessary and
proportionate. The cost of such measure shall be borne by the natural or legal person
holding the relevant commodity or product. Articles 197 and 198 of Regulation EU
No 9522013 shall apply accordingly. Upon request of competent authorities, non-
compliant relevant commodities and products may alternatively be confiscated and
placed by customs at the disposal of the competent authorities. Article 25
Exchange of information and cooperation among authorities
To enable the risk-based approach referred to in Article 143 for relevant
commodities and products entering or leaving the Union market and to ensure that
checks are effective and performed in accordance with the requirements of this
Regulation, the Commission, competent authorities and customs authorities shall
cooperate closely and exchange information. Customs authorities and competent authorities shall cooperate in accordance with
Article 472 of Regulation EU No 9522013 and exchange information necessary
for the fulfilment of their functions under this Regulation, including via electronic
means. 9.
10. 1. 2. 3. Risk-related information shall be exchanged
a Between customs authorities in accordance with Article 465 of Regulation
EU No 9522013 and
b Between customs authorities and the Commission in accordance with Article
161 of Regulation EU No 9522013. 4. Where, in relation to relevant commodities and products subject to this Regulation
that are either in temporary storage or placed under a customs procedure other than
release for free circulation, customs authorities at the first point of entry have
reason to believe that those relevant commodities or products are not compliant with
this Regulation, they shall transmit all relevant information to the competent customs
office of destination. Article 26
Electronic interfaces
1. The Commission shall develop an electronic interface based on the EU Single
Window Environment for Customs to enable the transmission of data, in particular
the notifications and requests referred to in Article 24, paragraphs 5 to 8, between
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national customs systems and the information system referred to in Article 31. This
electronic interface shall be in place at the latest four years from the date of adoption
of the relevant implementing act referred to in paragraph 3. 2. The Commission may develop an electronic interface based on the EU Single
Window Environment for Customs to enable
a Traders and operators to make available the due diligence statement of a
relevant commodity or product via national single window environment for
customs referred to in Article 8 of Regulation PO to check the reference
number and article number after the proposal is adopted and receive feedback
thereon from competent authorities and
b The transmission of that due diligence statement to the information system
referred to in Article 31 of this Regulation. implementing acts specifying
The Commission shall adopt
the details of
implementation arrangements for paragraphs 1 and 2 and, in particular, defining the
data, including its format, to be transmitted in accordance with paragraphs 1 and 2. The implementing acts may also determine that certain specific data available in the
due diligence statement and necessary for activities of customs authorities, including
surveillance and fight against fraud, is transmitted and registered in EU and national
customs systems. Those implementing acts shall be adopted in accordance with the
examination procedure referred to in Article 342. Chapter 5
Country benchmarking system and cooperation with third
countries
Article 27
Assessment of countries
This Regulation establishes a three-tier system for the assessment of countries or
parts thereof. Unless identified in accordance with this Article as presenting a low or
high risk, countries shall be considered as presenting a standard risk. The
Commission may identify countries or parts thereof that present a low or high risk of
producing relevant commodities or products that are not compliant with Article 3,
point a. The list of the countries or parts thereof that present a low or high risk shall
be published by means of implementing acts to be adopted in accordance with the
examination procedure referred to in Article 342. That list shall be updated as
necessary in light of new evidence. The identification of low and high risk countries or parts thereof pursuant to
paragraph 1 shall take into account information provided by the country concerned
and be based on the following assessment criteria
a
rate of deforestation and forest degradation,
b
rate of expansion of agriculture land for relevant commodities,
c
production trends of relevant commodities and products,
3. 1. 2. EN
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d whether the nationally determined contribution NDC to the United Nations
Framework Convention on Climate Change covers emissions and removals
from agriculture, forestry and land use which ensures that emissions from
deforestation and forest degradation are accounted towards the countrys
commitment to reduce or limit greenhouse gas emissions as specified in the
NDC
e
agreements and other instruments concluded between the country concerned
and the Union that address deforestation or forest degradation and facilitates
compliance of relevant commodities and products with the requirements of this
Regulation and their effective implementation
f whether the country concerned has national or subnational laws in place,
including in accordance with Article 5 of the Paris Agreement, and takes
effective enforcement measures to avoid and sanction activities leading to
deforestation and forest degradation, and in particular whether sanctions of
sufficient severity to deprive of the benefits accruing from deforestation or
forest degradation are applied. The Commission shall notify the countries concerned of its intent to assign a change
to the existing risk category and invite them to provide any information deemed
useful in this regard. The Commission shall allow the countries adequate time to
provide a response, which may include information on measures taken by the country
to remedy the situation in case its status or the status of parts thereof might be
changed to a higher risk category. It shall include in the notification the following information
a
b
the reason or reasons for the intention to change the risk identification of the
country or parts thereof
the invitation to respond to the Commission in writing with regard to the
intention to changing the risk status of the country or parts thereof
c
the consequences of its identification as a high or low risk country.
The Commission shall, without delay, notify the competent authorities of inclusion
or removal of a country from the list referred to in paragraph 1. Article 28
Cooperation with third countries
The Commission shall engage with producer countries concerned by this Regulation
to develop partnerships and cooperation to jointly address deforestation and forest
degradation. Such partnerships and cooperation mechanisms will focus on the
conservation, restoration and sustainable use of forests, deforestation, forest
degradation and the transition to sustainable commodity production, consumption
processing and trade methods. Partnerships and cooperation mechanisms may
include structured dialogues, support programmes and actions, administrative
arrangements and provisions in existing agreements or agreements that enable
producer countries to make the transition to an agricultural production that facilitates
the compliance of relevant commodities and products with the requirements of this
regulation. Such agreements and their effective implementation will be taken into
account as part of the benchmarking under Article 27 of this Regulation. 3. 4. 1. EN
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2. 3. 4. 1. 2.
3. Partnerships and cooperation should allow the full participation of all stakeholders,
including civil society, indigenous people, local communities and the private sector
including, SMEs and smallholders. Partnerships and cooperation shall promote the development of integrated land use
planning processes, relevant legislations, fiscal incentives and other pertinent tools to
improve forest and biodiversity conservation, sustainable management and
restoration of forests, tackle the conversion of forests and vulnerable ecosystems to
other land uses, optimise gains for the landscape, tenure security, agriculture
productivity and competitiveness, transparent supply chains, strengthen the rights of
forest dependent communities including smallholders, indigenous peoples and local
communities, and ensure public access to forest management documents and other
relevant information. The Commission shall engage in international bilateral and multilateral discussion on
policies and actions to halt deforestation and forest degradation, including in
multilateral fora such as Convention on Biological Diversity, Food and Agriculture
Organization of the United Nations, United Nations Convention to Combat
Desertification, United Nations Environment Assembly, United Nations Forum on
Forests, United Nations Framework Convention on Climate Change, World Trade
Organisation, G7 and G20. Such engagement shall include the promotion of the
transition to sustainable agricultural production and sustainable forest management
as well as the development of transparent and sustainable supply chains as well as
continue efforts towards identifying and agreeing robust standards and definitions
that ensure a high level of protection of forest ecosystems. Chapter 6
Substantiated concern
Article 29
Natural or legal persons substantiated concerns
Natural or legal persons shall be entitled to submit substantiated concerns to
competent authorities when they deem, based on objective circumstances, that one or
more operators or traders are failing to comply with the provisions of this
Regulation. Competent authorities shall diligently and impartially assess the substantiated
concerns and take the necessary steps, including checks and hearings of operators
and traders, with a view to detecting potential breaches of the provisions of this
Regulation and, where appropriate, interim measures under Article 21 to prevent the
placing making available on and export from the Union market of relevant
commodities and products under investigation. The competent authority shall, as soon as possible and in accordance with the
relevant provisions of national law, inform the natural or legal persons referred to in
paragraph 1, which submitted observations to the authority, of its decision to accede
to or refuse the request for action and shall provide the reasons for it. EN
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Article 30
Access to justice
1. 2. Any natural or legal person having sufficient interest, including those having
submitted substantiated concern in accordance with Article 29, shall have access to a
court or other independent and impartial public body competent to review the
procedural and substantive legality of the decisions, acts or failure to act of the
competent authority under this Regulation.
This Regulation shall be without prejudice to any provisions of national law which
require that administrative review procedures be exhausted prior to recourse to
judicial proceedings. Chapter 7
Information System
Article 31
Register Information System
1. The Commission shall establish and maintain, by the date established in Article
362, an information system Register which shall contain the due diligence
statements made available pursuant to Article 42. 2. The information system shall provide at least for the following functionalities
a
b
c
d
e
f
g
registration of operators and traders and their authorised representatives in the
EU for operators placing relevant commodities and products under the
customs procedure release for free circulation or export, the Economic
Operators Registration and Identification EORI number established pursuant
to Article 9 of Regulation EU No 9522013, shall be included in their
registration profile
registration of due diligence statements including the delivery to the operator
or trader concerned of a reference number for each due diligence statement
registration of the outcome of controls on due diligence statements
interconnection with customs via the EU Single Window Environment for
Customs when the Regulation is adopted, reference can be made to it
directly, in accordance with Article 26, including to allow the notifications
and requests under Article 245 to 8
allow the risk profiling of operators, traders and relevant commodities and
products for the purpose of identifying high risk consignments according to the
risk analysis in Article144
allow administrative assistance and cooperation between competent authorities
and the Commission to exchange information and data
allow communication between competent authorities and operators and traders
for the purposes of implementation of this Regulation. EN
54
EN
3.
4. 5. 1. 2. 3. The Commission shall, by means of implementing acts, establish rules for the
functioning of the information system, including rules for the protection of personal
data and exchange of data with other IT systems. Those implementing acts shall be
adopted in accordance with the examination procedure referred to in Article 332 of
this Regulation. The Commission shall provide access to that information system to customs
authorities, competent authorities, operators and traders in accordance with their
respective obligations under this Regulation. In line with the EUs Open Data Policy, and in particular the Directive EU
2019102436, the Commission shall provide access to the wider public to the
complete anonymised datasets of the information system in an open format that can
be machine-readable and that ensures interoperability, re-use and accessibility. Chapter 8
Review
Article 32
Review
No later than two years after the entry into force, the Commission shall carry out a
first review of this Regulation, and shall present a report to the European Parliament
and the Council accompanied, if appropriate, by a legislative proposal. The report
shall focus in particular on an evaluation of the need and the feasibility of extending
the scope of this Regulation to other ecosystems, including land with high carbon
stocks and land with a high biodiversity value such as grasslands, peatlands and
wetlands and further commodities. No later than five years after the entry into force and at least every five years
thereafter, the Commission shall carry out a general review of this Regulation, and
shall present a report to the European Parliament and the Council accompanied, if
appropriate, by a legislative proposal.
The first of the reports shall include in
particular, based on specific studies, an evaluation of
a
b
the need for and feasibility of additional trade facilitation tools to support the
achievement of the objectives of the Regulation including through recognition
of certification schemes
the impact of the Regulation on farmers, in particular smallholders, indigenous
peoples and local communities and the possible need for additional support for
the transition to sustainable supply chains. Without prejudice to the general review under paragraph 1, a first review of Annex I
shall be carried out by the Commission no later than two years after the entry into
force of this Regulation, and thereafter at regular intervals in order to assess whether
it is appropriate to amend or extend the relevant products listed in Annex I in order to
ensure that all products that contain, have been fed with or have been made using
36
and the re-use of public sector information OJ L 172, 26.6.2019, p. 5683. Directive EU 20191024 of the European Parliament and of the Council of 20 June 2019 on open data
EN
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relevant commodities are included in that list, unless the demand for those products
has a negligible effect on deforestation. The reviews shall be based on an assessment
of the effect of the relevant commodities and products on deforestation and forest
degradation, and take into account changes in consumption, as indicated by scientific
evidence. 4.
Following a review as set out in paragraph 3, the Commission may adopt delegated
acts in accordance with Article 33 to amend Annex I to include relevant products that
contain or have been made using relevant commodities. Chapter 9
Final provisions
Article 33
Exercise of the delegation
The power to adopt delegated acts is conferred on the Commission subject to the
conditions laid down in this Article. The power to adopt delegated acts referred to in Articles 93, 108 and 324 shall
be conferred on the Commission for a period of 5 years from DDMMYY. The
Commission shall draw up a report in respect of the delegation of power at the latest
6 months before the end of the 5 year period. The delegation of power shall be tacitly
extended for periods of an identical duration, unless the European Parliament or the
Council opposes such extension not later than three months before the end of each
period. The delegation of power referred to in Articles 93, 108 and 324 may be revoked
at any time by the European Parliament or by the Council. A decision to revoke shall
put an end to the delegation of the power specified in that decision. It shall take
effect the day following the publication of the decision in the Official Journal of the
European Union or at a later date specified therein.
It shall not affect the validity of
any delegated acts already in force. Before adopting a delegated act, the Commission shall consult experts designated by
each Member State
the
in accordance with
Interinstitutional Agreement of 13 April 2016 on Better Law-Making. the principles
laid down
in
As soon as it adopts a delegated act, the Commission shall notify it simultaneously to
the European Parliament and to the Council. A delegated act adopted pursuant to Articles 93, 108 and 324 shall enter into
force only if no objection has been expressed either by the European Parliament or
by the Council within a period of two months of notification of that act to the
European Parliament and the Council or if, before the expiry of that period, the
European Parliament and the Council have both informed the Commission that they
will not object. That period shall be extended by two months at the initiative of the
European Parliament or of the Council. 1.
2. 3. 4. 5. 6. EN
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Article 34
Committee procedure
1. 2. The Commission shall be assisted by a committee. That committee shall be a
committee within the meaning of Regulation EU No 182201137. Where reference is made to this paragraph, Article 5 of Regulation EU No
1822011 shall apply, having regard to the provisions of Article 11 thereof. Article 35
Repeals
Regulation EU No 9952010 is repealed with effect from the date of application of this
Regulation set out in Article 362. Article 36
Entry into force and date of application
1. 2. 3. This Regulation shall enter into force on the twentieth day following that of its
publication in the Official Journal of the European Union. Articles 3 to 12, 14 to 22, 24, 29 and 30 shall apply 12 months from the entry into
force of this Regulation. Articles referred to paragraph 2 shall apply 24 months from the entry into force of
this Regulation for operators that are microenterprises38 established by December 31,
2020, except for products covered in the Annex to Regulation EU No 9952010. Done at Brussels,
For the European Parliament
The President
For the Council
The President
Regulation EU No 1822011 of
the European Parliament and of
37
the Council of 16
February 2011 laying down the rules and general principles concerning mechanisms for control by Member
States of the Commissions exercise of implementing powers. 38
As defined in Article 31 of Directive 201334EU of the European Parliament and of the Council of
26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain
types of undertakings, amending Directive 200643EC of the European Parliament and of the Council and
repealing Council Directives 78660EEC and 83349EEC. EN
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LEGISLATIVE FINANCIAL STATEMENT
1. FRAMEWORK OF THE PROPOSALINITIATIVE
1.1. Title of the proposalinitiative
1.2. Policy areas concerned
1.3. The proposalinitiative relates to
1.4. Objectives
1.4.1. General objectives
1.4.2. Specific objectives
1.4.3. Expected results and impact
1.4.4. Indicators of performance
1.5. Grounds for the proposalinitiative
1.5.1. Requirements to be met in the short or long term including a detailed
timeline for roll-out of the implementation of the initiative
1.5.2. Added value of Union involvement it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities. For
the purposes of this point added value of Union involvement is the value resulting
from Union intervention which is additional to the value that would have been
otherwise created by Member States alone. 1.5.3. Lessons learned from similar experiences in the past
1.5.4. Compatibility with the Multiannual Financial Framework and possible
synergies with other appropriate instruments
1.5.5. Assessment of the different available financing options, including scope for
redeployment
1.6. Duration and financial impact of the proposalinitiative
1.7. Management modes planned
2. MANAGEMENT MEASURES
2.1. Monitoring and reporting rules
2.2. Management and control systems
2.2.1. Justification of
mechanisms, the payment modalities and the control strategy proposed
the management modes,
funding
the
implementation
2.2.2. Information concerning the risks identified and the internal control systems
set up to mitigate them
2.2.3. Estimation and justification of the cost-effectiveness of the controls ratio of
control costs value of the related funds managed, and assessment of the
expected levels of risk of error at payment at closure
2.3. Measures to prevent fraud and irregularities
3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSALINITIATIVE
EN
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3.1. Headings of the multiannual financial framework and expenditure
budget lines affected
3.2. Estimated financial impact of the proposal on appropriations
3.2.1. Summary of estimated impact on operational appropriations
3.2.2. Estimated output funded with operational appropriations
3.2.3. Summary of estimated impact on administrative appropriations
3.2.4. Compatibility with the current multiannual financial framework
3.2.5. Third-party contributions
3.3. Estimated impact on revenue
EN
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LEGISLATIVE FINANCIAL STATEMENT
1. FRAMEWORK OF THE PROPOSALINITIATIVE
1.1. Title of the proposalinitiative
Proposal for a Regulation of the European Parliament and of the Council concerning
certain relevant commodities and products associated with deforestation and forest
degradation
1.2. Policy areas concerned
09 - Environment and Climate Action
1.3. The proposalinitiative relates to
a new action
a new action following a pilot projectpreparatory action1
the extension of an existing action
a merger or redirection of one or more actions towards anothera new action
1.4. Objectives
1.4.1. General objectives
The general objective is to curb deforestation and forest degradation that is provoked
by EU consumption and production. This, in turn, is expected to reduce EU-driven
greenhouse gas emissions and biodiversity loss. 1.4.2. Specific objectives
Specific objective No
Curbing deforestation and forest degradation that is provoked by EU consumption
and production
Minimise consumption of products coming from supply chains associated with
deforestation or forest degradation. Increase EU demand for and
commodities and products. 1.4.3. Expected results and impact
trade
in
legal and deforestation-free
Specify the effects which the proposalinitiative should have on the beneficiariesgroups targeted. The proposed regulation will prevent deforestation driven by EU consumption and
production of the six commodities included in the scope, with projected benefits well
above 71,920 hectares of forest less affected by EU-driven deforestation and forest
degradation annually by 2030. This would also mean a reduction of at least 31.9
million metric tons of carbon emissions to the atmosphere every year due to EU
consumption and production of the relevant commodities, which could be translated
into economic savings of at least 3.2 billion EUR annually. In addition, the
regulation is expected to decisively contribute to protecting biodiversity, to creating a
level playing field for companies operating in the EU market, as well as to achieving
1
As referred to in Article 582a or b of the Financial Regulation. EN
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the specific objectives of the regulation Minimising the consumption of products
coming from supply chains associated with deforestation or forest degradation and
increasing EU demand for and trade in legal and deforestation-free commodities
and products. 1.4.4. Indicators of performance
Specify the indicators for monitoring progress and achievements.
1. At least 71,920 hectares of forest less per year will suffer deforestation or forest
degradation due to EU consumption or production of the commodities in the scope. 2. At least 31.9 million metric tons of carbon per year will not be emitted to the
atmosphere due to EU consumption and production of the commodities in the scope. 3. Fewer animal and plant species will be threatened by extinction through EU-
driven deforestation and forest degradation. 4. Operators and traders dealing with the relevant commodities in the EU will have a
clear and predictable EU legal framework that levels the playing field as regards
obligations to prevent deforestation and forest degradation. 5. The quantity of products sold in the EU coming from supply chains associated
with deforestation or forest degradation will be reduced. 6. EU consumption and production of deforestation-free commodities and products
will grow. 1.5.
Grounds for the proposalinitiative
1.5.1. Requirements to be met in the short or long term including a detailed timeline for
roll-out of the implementation of the initiative
The proposed regulation will be directly applicable from the day of its entry into
force. A series of implementingdelegated acts, as well as administrative tasks, will
be deployed in a time-horizon of 5 years from the date established in Article 36 1. A detailed list of these envisaged actions is provided below
1. Before the date established in Article 362
a A public bid or administrative arrangement for a contract to develop the country
benchmarking system according to the criteria specified in the regulation. b A public bid for an impact assessment on the covering further commodities and
products as well as other vulnerable ecosystems. c A public bid for a contract to support the Commission in the tasks mandated in the
regulation. d A contract or administrative arrangement to develop the information system to
store and exchange data on operators and self-declarations.
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2. Within the first five years after the date established in Article 361
a Commission adopts lists of low and high risk countries and parts thereof via
delegatedimplementing act. b Commission adopts adapted product scope via delegatedimplementing act. d A public bid for a contract to support the first evaluation of the regulation. e Commission conducts and approves first evaluation of
accompanied as appropriate by a
amendments. the regulation,
legislative proposal proposing possible
1.5.2. Added value of Union involvement it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities.
For
the purposes of this point added value of Union involvement is the value resulting
from Union intervention which is additional to the value that would have been
otherwise created by Member States alone. Reasons for action at European level ex-ante
Drivers of deforestation and forest degradation are linked to EU and international
trade. Action at EU level is essential to enable international trade issues to be
addressed in a coordinated and harmonised way, and to ensure a level playing field
for companies, in terms of requirements to be met before placing or making products
available on or exporting from Union market. Action at EU level would also benefit
from previous EU experience in dealing with complex supply chains e.g. stemming
from the legislation related to illegal logging for example. Only action at EU level would guarantee to effectively achieve the goals of the
intervention, that is, curbing EU-driven deforestation and therefore GHG emissions
and biodiversity loss provoked by EU consumption and production, as well as
minimising
the consumption of commodities and products associated with
deforestation. Expected generated Union added value ex-post
The EU intervention will ensure harmonised requirements for the products and
commodities in the scope of the Regulation that are being placed on the EU market,
regardless of whether they are produced inside or outside the EU. This will ensure a
fair playing field for companies operating in the EU, which will be subject to the
same obligations, regardless of the EU country in which they are based. The
intervention will significantly decrease EU-driven deforestation see expected results
above, GHG emissions and biodiversity loss. The proposal should also contribute to minimising the consumption of products
coming from supply chains associated with deforestation or forest degradation and
increasing EU demand for and trade in legal and deforestation-free commodities
and products.
1.5.4. Compatibility with the Multiannual Financial Framework and possible synergies
with other appropriate instruments
The European Union has approved a major recovery plan based on a reinforced long
term budget for the next Multiannual Financial Framework and a new recovery
instrument, Next Generation EU. The initiative falls under the umbrella of the European Green Deal, which guides the
EUs recovery strategy. It aims to make te EU climate-neutral by 2050 and to curb
biodiversity loss. This includes the objective of promoting products and value chains
that do not involve deforestation and forest degradation. It also advocates for more
sustainable food supply chains and for the EU to set new standards for sustainable
growth and use its economic weight to shape international standards that are in line
with EU environmental and climate ambitions. The initiative is also part of the
priorities set out in the Biodiversity strategy for 2030 and the Farm to Fork Strategy. The initiative falls under Heading 3 Natural Resources and the Environment, Title
9 Environment and Climate Action of the Multiannual Financial Framework. As
detailed below, the implementation of this piece of legislation will require additional
human resources and also some supporting expenditure. The supporting expenditure
will be covered by the EU programme for the environment and climate action LIFE
20212027. 1.5.5. Assessment of the different available financing options, including scope for
redeployment
The implementation of the Regulation will result in a large and diverse number of
economic sectors falling under the scope of the Regulation, which will necessitate
additional human resources, procurement resources for external contractors and
administrative arrangements between Commission services. Five additional FTEs within DG ENV will be needed to implement the Regulation,
including international cooperation. Two additional FTEs within DG INTPA
focusing on cooperation and development as well as 1 additional FTEs for TAXUD
are needed to implement the Regulation, in particular obligations related to customs. The needs are based on calculations of the resources assigned to the legislative tools
aimed at fighting illegal logging EUTR and FLEGT Regulation, the former of
which will be replaced by the proposed initiative. The current available staff in DG
ENV are 3.25 AD 1 AST 1 Free SND 0.5 FTE of a contract agent. This covers
a Implementing, monitoring and reviewing two EU regulations EUTR and FLEGT
Regulation b negotiating and implementing Voluntary Partnership Agreements
with five countries Indonesia, Vietnam, Laos, Thailand and Malaysia and
cooperating with other producing and consuming countries, including a permanent
cooperation structure with China c representing the EU in multilateral fora FAO,
United Nations Forum on Forests UNFF and the International Tropical Timber
Organization ITTO d implementing the additional actions foreseen in the
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Commission Communication on Stepping up EU Action to Protect and Restore the
Worlds Forests.2
The new proposal will not only integrate existing EU legislation, but also
significantly expand the scope of actions and the complexity of implementation,
which entails the need for new resources. The new proposal will involve expanding
the scope from one commodity wood to six adding beef, palm oil, soy, cocoa and
coffee and their derived products, and it will expand its coverage to go beyond
legality and include sustainability. This, in turn, is expected to increase the value of
the economic sectors concerned as well as the number of stakeholders and third
countries directly and strongly affected by the Regulation. There will be more Expert
Group meetings from five to six and more members of the group from only
member states to include stakeholders and third countries. There will be a new
information system see below, in addition to the one dedicated to the FLEGT
Regulation.
The country benchmarking system see below is expected to involve
closer cooperation with dozens of countries. The political visibility and sensitiveness
of the Regulation will increase in comparison with the previous situation covering
only wood, as it will affect sectors that are essential for the economies of particular
countries e.g. cocoa in Ivory Coast and Ghana palm oil in Indonesia and Malaysia
soy and cattle in Brazil and Argentina requiring intensified bilateral engagement
including at expert level. The representation duties of DG ENV in international fora
will increase, too. The reporting duties of member states will increase in line with the
greater scope of commodities and the value of economic sectors involved. The
transition to the new Regulation, the repeal of the EUTR and the adaptation of the
FLEGT Regulation will involve additional tasks over the first five years of operation. All these new activities and tasks will substantially increase DG ENVs workload. The higher political and economic weight of the new Regulation will require more
preparation and more analytical work to manage more interactions at both
political and working level with other Commission departments, with the Council
and the European Parliament, with stakeholders, with third countries and with
international organisations. The additional reporting tasks carried out by and the
added tools the information system and the benchmarking system managed by DG
ENV will require additional oversight by DG ENV. Streamlining and improving
implementation in comparison with the EUTR and FLEGT Regulations which, as
reflected in the Fitness Check, had a number of shortcomings , taking also into
account the bigger scope, will demand more resources from DG ENV dedicated to
monitoring implementation in member states. All these tasks require a high capacity of political judgement, policy knowledge,
analytical skills, independence and resilience that can only be delivered by AD
officials. The complex supply chains of the commodities involved, and the
geographical differences across the globe, would make it advisable to aim at a certain
degree of specialisation within DG ENVs team in charge of the implementation. This can be done by commodity, by region or by task, but it will require the
additional staffing resources as set out above. Outsourcing will be used as far as
possible see below, but this also requires oversight. In addition, there are core tasks
that involve a high degree of political sensitivity and need to be carried out by the
Commission. 2
httpseur-lex.europa.eulegal-contentENTXT?qid1565272554103uriCELEX52019DC0352
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Resource needs will increase for DG ENV, DG INTPA and DG TAXUD. DG ENV
will have to work on the complex exercise of country benchmarking both
technically and diplomatically, while as at the same time continuing the
implementation of previous legal obligations in this new context, including
international cooperation constant work with partner countries, both consumer and
producing, crucial to avoid leakage. DG INTPA will in particular focus on new
cooperation programs under the frame of Forest Partnerships, which will be aimed,
among other goals, at helping producing countries comply with the Regulation. The
Forest Partnerships will be offered to all relevant countries, including those currently
engaged in Voluntary Partnership Agreements negotiations or implementation. DG
TAXUD will work on the general policy implementation of the Regulation as well as
preparatory work and drafting of secondary legislation in relation to relevant
commodities and products entering or leaving the Union market. These activities will
require the additional human resources for DG ENV, DG INTPA and DG TAXUD. Before the entry into force and in the first five years of operation, there will also be a
need for procurement budget for external contractors that will be supporting the first
review of the product scope, the first evaluation of the regulation and the general
implementation of the regulation. The estimated budget for these three contracts over
the first five years is EUR 3,050,000. This estimate is based on previous procurement
contracts with the same characteristics. There is also a need for developing the due diligence registry, a database linking
customs authorities of member states, other competent authorities of member states
and the Commission, and storing and facilitating information supplied by operators
essentially their registration and their self-declarations. This could be done either
via an external contractor or with an administrative arrangement with Commission
services. DG ENV has facilitated a budget estimate of EUR 1.5 million for five years
to create and maintain the database with the required functionalities. In addition,
TAXUD has filed a budget of 950,000 over the first five years of operation for the IT
work necessary to adapt the custom systems to the changes required by the
Regulation. IT development and related procurement choices will be subject to pre-
approval by the European Commission Information Technology and Cybersecurity
Board. As regards the creation and the operation of the country benchmarking, this could be
done via an administrative arrangement or an external contract. A provisional budget
of EUR 4,369,000 is foreseen for the first five years. This is nearly five times the
amount contemplated in the Impact Assessment, which was calculated in terms of
working hours. This is because the benchmarking foreseen in the Impact Assessment
was a simplified version, which has been enlarged with new assessment criteria, as
well as with increased cooperation duties with affected countries, in the final legal
proposal. These new features are labour intensive assessing the legislation and
enforcement of legislation in every country is an ambitious endeavour and will
involve a much larger amount of working hours. The revamped amount has been
calculated taking into account the experience of the country overviews of the EU
Timber Regulation. EN
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1.6. Duration and financial impact of the proposalinitiative
limited duration
in effect from DDMMYYYY to DDMMYYYY
Financial impact from YYYY to YYYY for commitment appropriations and
from YYYY to YYYY for payment appropriations. unlimited duration
Implementation with a start-up period from 2023 to 2027,
followed by full-scale operation.
1.7. Management modes planned3
Direct management by the Commission
by its departments, including by its staff in the Union delegations
by the executive agencies
Shared management with the Member States
Indirect management by entrusting budget implementation tasks to
third countries or the bodies they have designated
international organisations and their agencies to be specified
the EIB and the European Investment Fund
bodies referred to in Articles 70 and 71 of the Financial Regulation
public law bodies
bodies governed by private law with a public service mission to the extent that
they are provided with adequate financial guarantees
bodies governed by the private law of a Member State that are entrusted with
the implementation of a public-private partnership and that are provided with
adequate financial guarantees
persons entrusted with the implementation of specific actions in the CFSP
pursuant to Title V of the TEU, and identified in the relevant basic act. If more than one management mode is indicated, please provide details in the Comments section. Comments
3
Details of management modes and references to the Financial Regulation may be found on the
BudgWeb site
httpsmyintracomm.ec.europa.eubudgwebENmanbudgmanagPagesbudgmanag.aspx
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2. MANAGEMENT MEASURES
2.1.
Monitoring and reporting rules
Specify frequency and conditions. The LFS concerns staff expenditure, procurement, and possibly adminstrative
arrangements. Standard rules for this type of expenditures apply
2.2. Management and control systems
2.2.1. Justification of the management modes, the funding implementation mechanisms,
the payment modalities and the control strategy proposed
The management mode for the initiative is direct management by the Commission. The Commission will be assisted by an Expert Group with member states
representatives and stakeholders The Commission Expert GroupMulti-Stakeholder
Platform on Protecting and Restoring the Worlds Forests. The Commission will also
be assisted by a Committee. Overall, the initiative involves staff expenditure, procurement and possibly
administrative arrangements. Standard rules for this type of expenditure apply. 2.2.2. Information concerning the risks identified and the internal control systems set up
to mitigate them
Overall, the initiative involves staff expenditure, procurement and possibly
administrative arrangements. Standard rules for this type of expenditure apply. 2.2.3. Estimation and justification of the cost-effectiveness of the controls ratio of control
costs value of the related funds managed, and assessment of the expected levels
of risk of error at payment at closure
Overall, the initiative involves staff expenditure, procurement and possibly
administrative arrangements. Standard rules for this type of expenditure apply.