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The New European Regulation on Deforestation and Forest Degradation, implemented on June 29, 2023, poses a significant challenge for market participants. It mandates these players to configure their Product Compliance Systems in such a way that they can guarantee the deforestation-free status of their products throughout the supply chain in document form. By the dawn of 2025, specific products (known as relevant products) can only be legally traded within Europe or exported from the EU if they are produced deforestation-free and abide by the laws of the country of origin.
Relevant Products under the Regulation on Deforestation-Free Supply Chains
Relevant products under the Regulation on deforestation-free supply chains include all products and product groups listed in Annex I of the Regulation if they contain relevant raw materials or are produced with or fed these raw materials. These crucial raw materials encompass beef, cocoa, coffee, palm oil, rubber, soy, and wood.
The Role of Businesses under the Regulation on Deforestation-Free Supply Chains
All businesses that introduce relevant products into the EU market, make them available, or export them from the EU are considered “market participants” under the new European Regulation on Deforestation and Forest Degradation. The Regulation provides certain relaxations only for small and medium-sized traders in the sense of Directive 2013/34/EU (so-called SME retailers).
The Essential Duties of Businesses under the Regulation on Deforestation-Free Supply Chains
Businesses must ensure that their products are deforestation-free, adhering to the new European Regulation on Deforestation and Forest Degradation. This requirement implies that no deforestation of forests to farmland has occurred at the production sites. Furthermore, they must comply with the applicable laws of the country of origin, including not just forestry and nature conservation laws, but also labor rights, human rights, rights of indigenous people, and local anti-corruption laws.
To fulfill these requirements, the EU Deforestation Regulation demands comprehensive documentation from all market participants in the supply chain, proof of compliance with the Regulation (e.g., geolocation data from production companies), risk assessment for each involved product, and the electronic submission of a due diligence statement to the competent authorities.
Consequences of Non-compliance with the Regulation on Deforestation-Free Supply Chains
Violating the Regulation on deforestation-free supply chains can result in penalties of up to 4% of a company’s annual revenue. Additionally, competent national supervisory authorities can not only ban the sale of non-compliant relevant products but also enforce market withdrawal and recall of these products from end-users.
Our Dutch Firm’s Role in the Regulation on Deforestation
As a dedicated team focusing on Product Compliance & Regulations, we are monitoring the development of the new European Regulation on Deforestation and Forest Degradation and its potential impacts on current practices in the sector. If you require assistance in assessing the implications of the Regulation on deforestation-free supply chains for your business, drafting an internal compliance structure, or understanding the deforestation regulation in general, feel free to contact our Product Compliance team. Our experts specializing in deforestation regulations are prepared to help tackle the challenges within your organization.
Dutch attorneys for Product Compliance
If you have any questions or require legal assistance regarding New European Regulation on Deforestation, please don’t hesitate to reach out to our knowledgeable and dedicated team at our Dutch law firm. Our Dutch lawyers are committed to providing exceptional legal services and personalized attention to address your unique needs. You can contact us through our website, via email, or by phone. Our friendly and professional staff will be more than happy to assist you and schedule a consultation with one of our expert attorneys in the Netherlands, for example a Dutch litigation attorney or contract lawyer in the Netherlands in Amsterdam. We look forward to the opportunity to help you navigate the complexities of the legal landscape and achieve the best possible outcomes for your case.
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