EUDR Update: Sourcemap Analysis

After initially announcing their intent to delay the EU Deforestation Regulation by an additional year, last week the EU Commission instead introduced a proposal that would retain the existing December 30th, 2025 deadline for non-SME operators, while introducing significant simplification measures for SME’s, downstream operators and traders. 

Commission Re-Commits to December Deadline and Introduces Grace Period 

Non-SME operators must still meet the existing December 30th deadline to comply with the Regulation. However the proposal introduces a 6 month grace period during which competent authorities will not enforce the Regulation - in other words, they will neither impose fines for non-compliance nor remove products from the market - to provide additional time for ensure all parties are prepared. Should competent authorities be made aware of non-compliance by an operator during this grace period, they may issue a warning. After the grace period ends on June 30, 2026, non-SME operators would be subject to full enforcement while SMEs would be given until December 30, 2026 to comply. 

Simplification for Downstream Operators and Traders; Few Changes for Primary Operators

The most significant simplification measure introduced in the Commission’s proposal was the removal of the responsibility to submit due diligence statements to EU TRACES for downstream operators and traders. Per the proposal, only the primary operator - or the entity that first places the commodity or good on the EU market or exports from it - is responsible for submitting a due diligence statement to Traces. Downstream operators and traders would only be responsible for collecting the due diligence reference numbers for their products and retaining them for the five year data retention period established by the law. The proposal does not indicate whether the reference numbers must be shared in real time, suggesting that primary operators could share reference numbers with their downstream operators and traders at the conclusion of each year rather than as each due diligence statement is submitted to TRACES. This simplification measure significantly reduces the number of due diligence statements that will be submitted to the EU Traces system, and reduces the burden on downstream operators and traders.

One-Time Simplified Declarations for Micro and Small Primary Operators

In addition to receiving additional time to comply with the Regulation, micro and small primary operators would also have simplified due diligence obligations to further reduce their administrative burden. Rather than submitting a due diligence statement for every product where they are the primary operator, micro and small primary operators would instead be required to submit a one-time simplified declaration in the EU Traces system, which would return a “declaration identifier”. The declaration identifier would then accompany any relevant products that a micro and small primary operator places on the EU market or exports (via customs declaration and other documentation). 

EUDR Readiness is Now More Important Than Ever

Now that the original December 30th deadline is back on the table for non-SME operators, it is more important than ever that companies ensure they are prepared for EUDR compliance. Companies that were anticipating an additional year to ramp up their preparedness have now had their window to prepare rapidly condensed. Most importantly, while downstream operators and traders have their due diligence burden significantly reduced, non-SME operator obligations under the law remain essentially unchanged, further reinforcing the importance of a robust and automated due diligence system that covers all key areas of the law. 

The EU has faced intense pressure from non-EU countries to delay the Regulation or to further water down its substance, yet this proposal from the Commission demonstrates that the EU remains committed to the law. It is imperative that the EU maintain this commitment and resist external pressure to make additional changes to the Regulation as this creates difficulty for the responsible companies who have been preparing to comply with this Regulation for the last two years. Once this proposal is enacted into law it is also critical that the Commission produce clear and straightforward guidelines so that there is no ambiguity in the interpretation of the adopted text, and both compliance and enforcement can align with the spirit and intent of the law.

December 30th is two months away, and time is of the essence. Is your company prepared?